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Energy tube market challenging but nears floor

Keywords: Tags  OCTG, oil country tubular goods, line pipe, energy tubulars, J55, X42, TMK Ipsco, Thorsten Schier


NEW YORK — Market conditions for energy tubulars remain challenging as competition for orders is fierce, market sources told AMM.

"Any type of inquiry that comes out is like raw meat: Everybody is fighting to get it," one southern distributor source said.

"Most tenders for bid are probably utilizing up to 15 to 20 vendors," a second southern distributor source said, adding that end users are in the driver’s seat as far as agreement terms go. "It’s a buyer’s market, and many end users are taking advantage of the situation." For example, some have specified that orders be fully cancellable or returnable.

"It’s more common because of the condition of the market right now," a third southern distributor source said.

Some sources did report an uptick in activity recently as more program business has been quoted, although neither oil nor natural gas prices have given market participants much hope for a sustained demand pickup.

"The (commodity) prices are kind of a little bit discouraging," the first southern distributor source said.

While market conditions remain tepid, energy tubular prices have started to stabilize as mills have pushed back against the recent slide, sources said.

"I don’t know how much further prices can go down," one trader said. "The worst may be behind us. My gut feeling is that we’re approaching a bottom."

He pointed to the recent domestic flat-rolled price increases as a possible bright spot for domestic welded tubular pricing. "With coil prices firming, I don’t think they (domestic mills) are discounting anymore," he said.

At least one domestic mill, Houston-based TMK Ipsco, is planning to raise prices for electric-resistance weld line pipe by $50 per ton effective July 1, according to a letter sent to customers.

Prices for domestic X42 line pipe held steady this month at $1,020 per ton, while domestic J55 casing is flat at $1,125 per ton.

Import prices for some energy tubulars have trended down further, although the declines were less than seen in recent months. Imported J55 casing fell to $820 per ton from $830 previously, while imported X42 line pipe dropped to $820 per ton from $825.

Sources are eagerly awaiting the outcome of a rumored early-July decision by domestic mills on whether to file a dumping case against foreign makers of oil country tubular goods, particularly South Korea.

"It certainly would have some stabilizing effect on the market," the trader said.

However, the first southern distributor said that inventory already on the ground could dampen the effect of a filing. "They (importers) have probably got enough pipe on the ground for the next two years or so," he quipped. A far more important issue is to have anti-dumping duties applied to Chinese green tube transformed in third countries and then shipped to the United States, he added. "If something like that’s not nipped in the bud, everybody’s going to start doing that."

The Commerce Department’s International Trade Administration recently found in the domestic industry’s favor in a preliminary decision in the case (amm.com, June 5).


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