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OCTG prices to rise in 2d half: TMK's Galitzine

Keywords: Tags  OCTG, energy tubular, Piotr Galitzine, 6th annual Tube and Pipe conference, oil country tubular goods, Thorsten Schier

HOUSTON — Energy tubular prices are expected to pick up in the second half of this year as consumers come back into the market to replenish inventories, according to TMK Ipsco chairman Piotr Galitzine.

“We think some clients spent their 2012 budget early and therefore there was a drop in rigs, distributor desires (in order) to reduce inventories for year end tax reasons (and the) drop in demand for pipe consequently (led to) downward pricing pressure in the second half of 2012. We anticipate slight improvement in pricing in the second half of 2013 as the overall economy improves, rig count increases,” he told AMM on the sidelines of its 6th annual Tube and Pipe conference in Houston.

Galitzine cautioned domestic producers against relying on a possible trade case against imported oil country tubular goods (OCTG) to improve pricing (, Jan. 16).

"Personally, I’ve always been a free marketer and trade cases are a last resort. It behooves all of us to become more efficient and cut costs. That’s where battles are won," Galitzine said.

Demand for OCTG is expected to remain robust in 2013 even in light of a slowing rig count, as intensity of use has increased.

"The drilling rigs that we’re talking about today are worth two and a half of your grandfather’s drilling rigs. We think the appetite for the tonnage is there," Galitzine said, with Houston-based TMK Ipsco estimating apparent demand for OCTG at about 6.5 million tons in 2012.

Galitzine cautioned against a recent stance by some domestic manufacturers in calling for a curb on exports of liquefied natural gas (LNG), which has the potential to improve prices and subsequently exploration.

"I think, as always, you have to be careful of the greater interest being subordinated by narrow local interests," he said.

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