Demand for steel pipe
and tube is fairly flat, held back by lackluster economic
growth in the United States and in the world.
However, there is at
least cautious optimism that 2014 will be marginally better as
last years inventory build has been largely worked off
and anticipation that even the laggard nonresidential
construction sector will be seeing more noticeable growth.
There also is expected to be a pickup in pipeline activity, at
least for some smaller projects.
This year there
will be slow to no growth, but it will start to slowly catch
up, said Paul Vivian, principal of St. Louis-based steel
tube and pipe research firm Preston Publishing Co., blaming
much of the industrys malaise on the painfully slow
economic recovery, marked by gross domestic product growth of
just 2 to 2.5 percent. It has caused demand to flatten
out somewhere between somewhat and significantly for everything
from the drill rig count to weakness in heavy
There are also some
bright spots, including demand for such products as mechanical
tubing for autos. North American light vehicle production is on
track to total more than 16 million vehicles this year compared
with 15.4 million cars and light trucks last year and a low of
8.6 million at the depth of the recession in 2009, said
Christopher Plummer, managing director at Metal Strategies
Inc., West Chester, Pa.
Demand for oil country
tubular goods (OCTG) is actually holding up pretty well--better
than the U.S. drill rig count would indicate, according to Kurt
Minnich, a partner at Spears & Associates Inc., Tulsa,
Okla., and manager of affiliated Pipe Logix Inc.
With as much as 75
percent of drilling being done horizontally or directionally
because of the amount of drilling in the nations shale
formations, the number of wells drilled in the United States is
expected to increase to 50,000 this year from 48,000 in 2012,
even though data from Houston-based Baker Hughes Inc. showed a
5.2-percent year-on-year decline in operating drill rigs as of
And Kimberly Leppold,
senior steel analyst at Metal Bulletin Research, noted that
with horizontal wells being deeper than vertical wells, OCTG
consumption per well has increased.
But the big issue when
it comes to OCTG is primarily uncertainty about what will
happen to the supply side: there was a flurry of announcements
of new seamless and welded OCTG pipe capacity additions,
including a large number of new mills, and major domestic
producers have filed a trade case against shipments from nine
countries that accounted for more than half of all U.S. OCTG
imports last year.
It will be an
interesting time in the next year or so as companies sort
through this supply movement, Minnich said.