Analyst sentiment split in wake of OCTG ruling

Jul 14, 2014 | 04:32 PM | Michael Cowden

Tags  oil country tubular goods, OCTG, KeyBanc Capital, Philip Gibbs, MBR, Metal Bulletin Research, Kim Leppold, Cowen Anthony B. Rizzuto Jr.

CHICAGO — While some analysts think domestic oil country tubular goods (OCTG) producers knocked one out of the park with the Commerce Department’s final duty determinations, others said that a ground-rule double may have been mistaken for a home run.

Generally increased duties, in particular on South Korean OCTG, should benefit both domestic OCTG and flat-rolled steel prices, some analysts said, but others believe the margins aren’t high enough to push Korean OCTG out of the U.S. market or reduce domestic consumers’ reliance on imports.

The spread between imported and domestic welded OCTG was approximately $200 per ton, which could narrow to around $60 to $70 per ton assuming duties are implemented—perhaps enough to change purchasing habits, Cowen & Co. analysts said in a July 14 research note. "Given the longer lead times and superior customer service provided by domestic producers, we may see an increase in customer demand for domestic product," they said.....

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