NEW YORK A domestic steel
mills announcement that it would boost prices on oil
country tubular goods (OCTG) could be a defensive move in a
sluggish economic environment, market sources told
"They increased their prices not
necessarily because of demand, but because they dont want
to see any further deterioration in pricing," one southern
distributor source speculated.
The long lead-up to
Houston-based Vallourec & Mannesmann USA Corp.s
$100-per-ton hike on carbon and alloy tubing, which
doesnt come into effect until the beginning of April (
amm.com, Feb. 19), also points to an effort to
shore up order books as buyers will look to purchase ahead of
the increase, sources said.
"This should stimulate
purchasing, shore up pricing," a second southern distributor
source said, noting that the increase comes in a tough pricing
environment. "Ive never encountered so much downside on
pricing as you had in the last couple of weeks," he said.
"Were not getting the business because were being
undercut probably by $30 to $40 (or) even $50 per ton."
Most OCTG product prices tracked
by AMM held steady in January vs. December or declined
only slightly. But on the whole, they are significantly lower
than they were at the same time last year.
Imported J55 casing can now be
had for as low as $870 per ton, down 5.9 percent from $925 in
December and down 24.3 percent from January 2012.
In addition to soft prices,
demand for OCTG at the distributor level is said to be tepid.
"Its just quiet. Were way, way down from last
year," a West Coast distributor source said.
U.S. drill rig activity
increased by three to 1,759 as of Feb. 15, according to
Houston-based oilfield services firm Baker Hughes Inc. However,
thats still 232 below levels seen at the same time last
Other mills are expected to
follow Vallourec & Mannesmann USAs lead.
"I havent heard of any
others (boosting prices), but they probably will," the first
southern distributor source said.