OCTG prices dive further, buyers await floor

Jul 26, 2012 | 03:07 PM | Michael Cowden

Tags  Oil country tubular goods, OCTG, OCTG prices, rig count, imports, oil, natural gas, drilling energy tubulars

TORONTO — Oil country tubular goods (OCTG) buyers continue to wonder when prices might bottom out, given the high level of imports and increased domestic capacity, especially after one pricing indicator registered a fourth consecutive monthly decline.

While some market sources contacted by AMM blamed imports for swooning prices, others blasted U.S. mills for continuing to expand OCTG capacity in what they characterized as an already oversupplied market.

"Contrary to what you see in steel, in pipe we don’t have a demand problem. It’s an oversupply problem," one trader said.

The rig count, a leading indicator of OCTG demand, has remained strong despite a decline in natural gas prices because of a switch to oil and natural gas liquids drilling activity.

"But you can saturate even the best of markets," the trader said.

As supply climbs, average spot OCTG prices dropped for the fourth month in a row in July to $1,857 per ton, down 1 percent from $1,875 in June, according to data from Tulsa, Okla.-based Pipe Logix Inc. Average spot welded OCTG tags fell to $1,716 per ton, off 0.9 percent from $1,731 in the same comparison, while average spot seamless OCTG prices slid to $1,998 per ton, down 1 percent from $2,019 the previous month.....