TORONTO — Oil country tubular goods (OCTG) prices have further room to fall before finding a bottom, traders and distributors said as one industry indicator showed a third consecutive monthly drop.

The traders and distributors pointed to a host of concerns, including domestic overproduction, imports, falling energy prices, political uncertainty in the United States and economic worries about Europe, China and other big emerging markets.

"Other than that, everything is just fine," one distributor said.

Average spot OCTG prices fell to $1,875 per ton for June, down 0.6 percent from $1,887 per ton in May, according to data from Tulsa, Okla.-based Pipe Logix Inc. Average spot welded OCTG tags stood at $1,731 per ton, down 0.5 percent, while average spot seamless OCTG prices slipped 0.7 percent to $2,019 per ton from $2,034 per ton in the same comparison.

That downward trend was confirmed by almost all market sources who spoke with AMM.

"Activity has been strong at a lot of these (OCTG) mills," a second distributor source said. "But I think there is a little too much inventory being produced than necessary to accommodate demand."

That’s been especially so in recent weeks, as energy prices—particularly oil tags—have taken a big hit, the second distributor said. With oil prices in the $70-per-barrel range a possibility, end-users who had become accustomed to oil prices of $90 to $100 per barrel or beyond are now examining their drilling programs more closely, with some scaling back planned activity, he said.

"Some people are taking a harder look at the bottom line and not doing things that aren’t absolutely necessary," the second distributor said. "Those that have been in this business a long time understand its volatility ... and if you don’t observe that (volatility) with some caution, you can get yourself in a lot of trouble."

OCTG hasn’t shown any major price deterioration to date, but the market has faced more of a change in market psychology, the second distributor and other market sources said. But prices could be affected if demand falters and OCTG availability rises significantly, they added.

Some end-users have made commitments to take a certain amount of pipe from mills, the second distributor said, noting that if they have since dialed back their drilling programs they won’t be consuming that material as quickly as expected and will delay further purchases.

Other markets sources expressed fears about OCTG slated for drilling programs finding its way to the spot market as end-users look to offload any material no longer needed.

While carbon grades of welded OCTG have been easy to find in the market for months, seamless alloy material—like 4.5- to 5.5-inch diameter high-collapse P110, popular in shale plays—is also "highly available," the second distributor said. "I don’t see prices deteriorating to unreasonably low levels. But mills are having to come off (higher prices)," he said.

One trader agreed. "There is too much production; markets are soft and prices are coming down," he said. "The question is: How long will it last?"

A turnaround in OCTG tags might not come before year-end, or even as far out as 2016, the trader said.

"The seamless market is way oversupplied and will continue to be oversupplied," he said, also blaming some offshore mills for ramping up shipments to the United States even though the market has slowed since the start of the year. "They are setting themselves up to get whacked" by a trade petition.

But the second distributor disagreed, arguing that a surge of new domestic mill capacity is more to blame for the current supply glut than imports.