Don’t ask some oil country tubular goods (OCTG) buyers about whether there is looming overcapacity in North America; it’s already here, they believe.

Sentiment ranges from optimism about the potential for shale play business and a pickup in offshore activity to downright bearishness among some traders and distributors.

"Effectively, the North American market, including Mexico, is totally self-sufficient," one trader said. "You can get anything you want from the mills on short notice. Anyone that says different is dreaming."

That’s left some traders who don’t like to carry inventory holding thousands of tons that they don’t want, he said. "You have almost 2,000 rigs running. The phones should be ringing off the hook. People should be desperate. But right now prices are falling."

Buying is slow in part because there are two separate markets: the shale plays, which use "P" grades and other alloy grades of OCTG, and the commodity carbon market, which largely has been saturated by lower-priced welded OCTG from South Korea, the trader said.

Even on the seamless side, U.S. Steel Corp. and Vallourec SA alone should be able to service the high-end U.S. shale market well, especially once Vallourec completes its new OCTG mill in Youngstown, Ohio, late this year, the trader said. Plus, Tenaris SA already has seamless facilities in Sault Ste. Marie, Ontario, and recently commissioned a new seamless mill in Veracruz, Mexico, both of which can supply the high-end seamless market in the United States, as well as Canada and Mexico.

The big mills probably saw the shale boom coming and built to what they thought needed capacity would be, he said. Assuming offshore activity picks up again, the premium seamless market in North America should be in decent shape—but if offshore continues to drag, the premium seamless market also could be at risk of big overcapacity in the North American Free-Trade Agreement (Nafta) region, he cautioned.

But the real problem isn’t so much domestic capacity as it is the structure of distribution in the United States, where only a handful of distributors have alliances with domestic mills while many more depend largely on imports, the trader said. "Those people (without a domestic connection) are going to buy import. It doesn’t matter how much capacity you have here. If they don’t have the ability to buy that product, they have to buy it somewhere else." Even while traders might not be as busy as they’d like, offshore tons will continue to come into the market because some customers have no choice but to buy from overseas.

So what do distributors think?

If just 1 million tons in annual capacity is added—something which appears to be almost a given—prices "are going to suffer," one distributor said. One or two mill projects to serve growing demand from the shales or offshore might have made sense, but not all of the announced new projects make sense anymore.