(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor: 16” and Under Outside Diameters – New U.S. line pipe projects announced in June and July include 743 miles of 16” & under pipelines which amounts to about 24% of the total. We expect this to continue as we have seen a number of announcements of gathering systems and processing capacity with a high percentage of expansions in the Permian Basin.
For example, Oryx Midstream announced early in August that it was extending its binding open season on its oil gathering system in NM & TX; EnLink Midstream is building a new Delaware Basin gathering system (Avenger); and Crestwood Energy Partners announced that it had just begun operating a processing plant in the Permian that included buying space on a pipeline and they committed to studying the possibility of more expansion. These are just a few examples but it bodes well for pipe makers. Greater than 16” Outside Diameter – Through July licenses, shipments in the large diameter sector so far are about 1.27 million tons. While the large diameter sector is lumpier than others, this equates to an annual pace of about 2.2 million tons – right on par with last year. Import share has declined on large OD by about four percentage points so far but it is difficult to determine if this is Section 232 related or not. We suspect that it is. U.S. domestic >16” capacity is about 3.5 million tons give or take. We noted earlier that the pace was about 2.2 million tons but we believe shipments will end up higher than that if all goes as we are forecasting. While import share is down by four points so far, it is unclear how the influence of the Section 232 and higher coil and plate prices will affect the source of supply mix. Import Supply – June imports were just below the licenses from last month at 162,075 tons. The July licenses show a big increase to 213,779 tons. The early forecast for August, with 10 of 23 days tallied, is a return to an even larger number at 225,099 tons. Project receipts can really create wild swings in this data. The top item for the month of June is Carbon ERW over 4 ½” not over 16”, at 52,066 tons, a big rebound in volume. The landed price was $858/ton, down $9/ton from last month but up $72/ton over the last 2 months.