Drill down in the details for 2013 OCTG outlook

Dec 31, 2012 | 07:00 PM | Michael Cowden

Tags  OCTG, 2013 outlook, drill rigs, Pipe Logix Inc., Michael Cowden,

Demand for oil country tubular goods (OCTG) in the United States was poised to improve at the close of 2012, although the sector could be off to a slow start after the New Year, according to some industry observers.

Low natural gas prices, high levels of OCTG imports and increased domestic capacity were all cited as headwinds by market players. But improvements in natural gas prices, natural gas drilling activity and, thus, OCTG demand--in addition to the potential filing of a long-rumored dumping case against South Korea and perhaps other overseas OCTG suppliers to the U.S. market--could bring a turnaround, sources said.

“Nobody is drilling for natural gas right now. Suggesting that, they will almost sounds crazy. But by the end of (2013) we may see some (natural gas drilling),” Pipe Logix Inc. manager Kurt Minnich told AMM.

Minnich predicts that natural gas drilling, which has fallen sharply along with natural gas prices, could reverse course as companies drill both to hold onto leases and as gas prices crawl above a threshold that could make some gas wells economical again. Others predict that continued economic recovery and resulting increased demand from manufacturing, as well as indirect demand related to an improvement in the U.S. housing market, also could benefit natural gas prices.

But while OCTG demand may hold up, OCTG prices could remain under pressure well into the second quarter of 2013, Minnich and others cautioned.....