NEW YORK Imports of oil country tubular goods (OCTG) and line pipe fell sharply in February compared with the previous month, although sources say the drop was not enough to keep up with tepid market activity.
OCTG imports totaled 176,299 tonnes in February, 34.4 percent lower than Januarys 268,593 tonnes and the second-lowest level recorded in the past 13 months, according to preliminary data released by the U.S. Census Bureau.
"Im not shocked at all (that imports dropped). I thought they should have dropped a long time ago. Sales are terrible," one trader said.
A second trader echoed that sentiment, pointing to stagnant demand for the commodity-grade products that make up the majority of imports.
"Theres just too much inventory; 700 to 800 rigs are still using what the Koreans are shipping," he said.
Shipments of OCTG from South Korea totaled 52,865 tonnes last month, down from record levels of 97,785 tonnes recorded in January and bucking market speculation that imports from Korea would increase as producers try to land material before the possible filing of a long-awaited trade case (amm.com, Feb. 12).
"These guys dont want to be wrong. If they are, theyre not going to be able to file another case for a very long time," the trader said of domestic producers apparent hesitation to file a case.
OCTG imports from Vietnam, rumored to also be in domestic producers sights for a potential trade case, fell significantly to 4,294 tonnes in February from 16,359 tonnes in January.
Drill rigs in the United States totaled 1,746 in Baker Hughes Inc.s latest count, down 30 from the week prior and 11.6 percent below the 1,968 recorded at the same time last year.
Sources showed little surprise at the dig-count drop, even as natural gas prices have risen to more than $4 per million British thermal units (mmBtu).
"Thats not enough. For real drilling to start, we need $6. For existing wells (to restart), its $5," he said.
Line pipe imports also fell sharply in February to 179,777 tonnes, 18.8 percent lower than the 221,303 tonnes shipped in January, with Koreas figures showing a 35.9-percent dip to 50,878 tonnes.
Indias shipments, on the other hand, jumped sharply to 22,344 tonnes in February from 2,923 tonnes the prior month, while shipments from the United Kingdom dropped to just 295 tonnes from 27,848 tonnes in the same comparison.
"Im hopeful on line pipe more so than on OCTG," the first trader said, citing the number of pipelines being planned primarily as a result of increasing oil production in the Bakken Shale.
Standard pipe imports were relatively steady month over month at 62,422 tonnes vs. 64,572 tonnes in January, while structural pipe and tube imports were largely flat at 32,535 tonnes vs. 30,796 tonnes previously. Imports of mechanical tubing dropped to 34,935 tonnes in February, down 26 percent from 47,241 tonnes in January.