NEW YORK Some oil country tubular goods (OCTG) market players are seeing an uptick in demand even as prices remain in slow decline.
"Were seeing a little uptick in demand. The extremely cold weather theyve received from Canada all the way down to the southern U.S., in opposition to construction, is actually good for drilling oil and gas wells," one trader said.
An industry analyst agreed that demand is expected to improve in the near term, in line with recent comments made by large mills that the rig count might be at its lowest level for the year as previously declining gas rig numbers have stabilized while oil rigs continue to increase.
"We certainly think the trend will be more towards the positive side going forward," Lynn Lupori-Gray, managing consultant at Mississauga, Ontario-based consulting firm Hatch Ltd., told AMM.
The U.S. rig count stood at 1,761 last week, down 11.1 percent from the same time last year, with Canadian drilling falling 5.6 percent to 662 in the same comparison, according to data from oilfield services firm Baker Hughes Inc. (amm.com, Feb. 25).
While demand could pick up, prices for most OCTG products continued to slide in February as imports, especially from South Korea, shot up early in the year.
"As long as those continue to come in as they are and without some fundamental change to demand, prices will continue to remain low," Lupori-Gray said.
Average prices for all OCTG products stood at $1,702 per short ton in February, down 1 percent from $1,720 per ton in January. This marked the 11th consecutive drop for average OCTG prices to their lowest level since February 2011, when prices were at $1,694 per ton. The averages for welded and seamless OCTG both fell 1.1 percent to $1,574 per ton and $1,830 per ton, respectively, from prior-month levels of $1,591 per ton and $1,850 per ton, according to data from Tulsa, Okla.-based Pipe Logix Inc.
Compared with February 2012, overall average, welded and seamless OCTG prices for the month all fell by around 11 percent from $1,914, $1,769 and $2,059 per ton, respectively.
Some sources were still adamant that a trade case against South Korean producers of welded OCTG products is looming.
"The Koreans are just sure theyre going to get slammed with an anti-dumping suit. The U.S. mills are calling everybody, saying theyre definitely going to do this. Theyre not even hiding it," the trader said, adding that this was likely the reason for soaring imports from the Asian country in January. "Theyre trying to load up in advance of these looming dumping suits. They know its going to happen."
However, Lupori-Gray expressed caution, saying there was "no clear direction" for the case, which has been a subject of industry discussion for years (amm.com, March 21, 2010).
U.S. imports of welded OCTG from South Korea totaled 91,170 tonnes in January, according to preliminary data from the U.S. Census Bureau, more than triple the 26,645 tonnes imported from the nation in December.
Imports of line pipe from the Asian nation jumped to 78,270 tonnes, more than double the 36,668 tonnes brought in during December.