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OCTG prices slide as trade case talk grows

Keywords: Tags  oil country tubular goods, OCTG, Pipe Logix, OCTG prices, imports, trade petition, steel tube, steel pipe steel

CHICAGO — Prices for oil country tubular goods (OCTG) continued to slide in September as market chatter intensified about a potential trade case against South Korea and perhaps other OCTG-producing nations.

The long-standing rumors swirled as OCTG imports from Korea appeared to ramp up again in September despite falling prices and bearish market sentiment, according to U.S. government data.

"Business sucks. Nobody is buying," one trader said. "Everybody is waiting to see what happens (regarding a potential trade case)."

Another trader said that his company had decided to stop trying to chase low prices from some Korean OCTG producers because they left little room for profits. Still, he was hesitant to lend much sympathy to domestic mills. "The market is bad. Welcome to the club," he said. "I don’t see much changing through possibly the first half of next year."

That sentiment appeared to be reflected in recent data from Tulsa, Okla.-based Pipe Logix Inc., which showed average domestic OCTG prices at $1,811 per ton last month, down 2.2 percent from $1,851 in August. Welded OCTG prices averaged $1,677 per ton in September, down 1.5 percent from $1,703 the previous month, while seamless OCTG prices slid 2.7 percent to $1,946 per ton from $1,999.

One distributor source agreed that prices were falling and business was difficult, but he questioned whether a trade petition would remedy domestic mills’ woes.

Unlike past steel-market stumbles, the current market is unlikely to be saved by a shot in the arm from emerging markets, given global economic uncertainty and increased capacity worldwide, he said. Worse, the capacity spigot is unlikely to be turned off quickly, in part because the steel industry may have "lost sight" of the price of steel and become used to an "overpriced" level that has been used to justify one capacity expansion after another.

"You can’t artificially keep prices up just because that’s the way it used to be," the distributor source said, arguing that tags seen in the past decade might not return even if a dumping case were brought against Korea or another OCTG-producing nation. He brushed off the notion of any potential trade petition as a "Band-Aid."

U.S. imports of OCTG from Korea jumped to 55,498 tonnes in September, according to license data from the Commerce Department’s Import Administration, up 74.6 percent from 31,791 tonnes in August but down nearly 21 percent from 70,216 tonnes in July.

Overall OCTG imports reflected a similar trend, with license data volumes totaling 254,250 tonnes in September, up 9.8 percent from 231,562 tonnes in August but down 9.8 percent from 281,767 tonnes in July. The gain appeared to come in part from smaller OCTG-producing nations such as Vietnam, which was set to import 13,377 tonnes in September, according to the license data, up more than fivefold from 2,435 tonnes in August but down 35.8 percent from 20,826 tonnes in July.

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