CHICAGO Steel tube and
pipe prices have fallen across the board in recent weeks as
oversupply and weakening demand have hit energy tubular tags,
market sources said.
At the same time, it remains to
be seen whether announced hikes for welded products such as
hollow structural sections (HSS) and standard pipe will boost
prices or prevent further declines outside of the energy
sector, they said.
Market players appeared divided
over the direction of the market in general, with roughly half
of respondents to a recent survey characterizing demand as
"good" and the remainder split between "fair" and "poor." A
similar divide emerged on the pricing front, with about 50
percent of respondents saying they expect prices to continue to
move downward in coming weeks while the other half believe
prices will either hold steady or rise.
"Domestic mills will raise
prices on just good rumors," one respondent said, adding that
prices would nonetheless remain relatively stable. Another
source contended that prices were in a "free fall" due to lack
While prices fell for a wide
array of products, energy tubulars and oil country tubular
goods (OCTG) in particular saw some of the biggest
The trend also was reflected in
recent data from Tulsa, Okla.-based Pipe Logix Inc., which
showed average domestic OCTG prices at $1,771 per ton last
month, down 2.2 percent from $1,811 in September. Welded OCTG
prices averaged $1,644 per ton in October, down 2 percent from
$1,677 the previous month, while seamless OCTG prices slid 2.5
percent to $1,898 per ton from $1,946.
Traders and distributors in the
OCTG sector blamed the decline on an abundance of both imported
and domestic material, a lower drill rig count and a push both
by mills and buyers to liquidate inventory on the ground ahead
of year-end inventory taxes in some states.
One distributor source said that
end users could practically name their prices, given the glut
of material available. "The market is continuing to slide, and
I dont know whats going to stop it. The only thing
thats going to turn it around is a shortfall in supply,
and I dont see that happening anytime soon," he said,
noting recent declines in the drill rig count, a key indicator
of future OCTG demand.
The rig count stood at 1,800 for
the week ended Nov. 2, down 26 from the previous week and off
226 from the same period last year, according to Houston-based
oilfield services firm Baker Hughes Inc.
The distributor source said he
was pinning his hopes in part on a cold winter, which might
bring sustained higher prices for natural gas and see the rig
count do an about-face.
A second distributor source
acknowledged that the OCTG market had seen some
"deterioration," but argued that it was largely because of
seasonal factors, such as year-end inventory liquidation, being
amplified by a lower drill rig count. "I think this is still a
healthy industry and will be going into next year," he said,
although he conceded that his firm didnt expect to see as
strong a start to 2013 as it experienced in early 2012.
"The more available capacity you
have, the more mills are going to be beating each other up. All
of them want a piece of this (U.S. OCTG) market," he said.
A host of companies have
recently completed, are working on or have announced plans to
expand OCTG capacity in the United States.
One trader predicted that a
trade complaint might be filed early next year against energy
tubulars from South Korea, given continued high import volumes
from the country.
Imports of OCTG are expected to
total around 267,180 tonnes in October, according to license
data compiled by the U.S. Commerce Department, up 0.8 percent
from 265,185 tonnes in September and 8.8 percent higher than
245,537 tonnes in October 2011.
But while OCTG imports overall
have moderated, import licenses for Korea totaled 88,601 tonnes
in October, up 32.4 percent from 66,904 tonnes the previous
month and 58.6 percent ahead of 55,851 tonnes in October