(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor: <=16” Diameter – Small diameter line pipe shipments have been on the decline since January 2019. The average volume over the last 4 months, including licenses for March, was about 72,000 tons. This is comparable to the average at the end of 2015 leading to the lowest rig count on record in May 2016. In 2Q09 – 3Q09, the average volume was about 35,000 tons. Upstream activity has fallen off dramatically over the course of the last 4 weeks declining by 243 rigs in the US. OCTG demand has already been affected in this crisis of unprecedented oil demand destruction combined with a jump in oil supply. Small iameter line pipe, already trending downward, will follow closely behind on the upstream side and will take another hit later for downstream applications as projects and refurbishments are delayed or cancelled. >16” Diameter – Six pipeline companies cut $1.9 billion from their 2020 budgets. That headline from the March 23 edition of the Houston Chronicle, based on Simmon’s research, says a lot about the overall NA line pipe sector in the shadow of COVID-19 and the oil price war. According to the article, this represents an overall 30% cut in planned capital expenditures for new pipeline and storage projects in 2020 for these firms and these are not the only cuts. Pipelines affected include Red Oak, Liberty, Ace, Elk Creek, and the West Texas LPG Pipeline to name a few. In addition to projects directly affected, the permitting process is moving more slowly. Also, the pipeline project ‘pipeline’ always resets to some degree in periods of disruption in the oil and gas sector. Projects that are in process will be completed for the most part, new FIDs delayed, and a lack of new announcements will hit this sector in 9 – 18 months. Import Supply – The February import total was 43,528 tons which is well below the license number from last month. March import licenses are back up to 71,833 tons. The April forecast, with 10 of 21 days summed, is up, at 57,470 tons. The big import item for the month of February 2020 was Alloy SAW over 16” OD , with 7,267 tons. The price was $1,169/ton. Project import most likely.
Preston Pipe Report – The Line Pipe Market Apr 2020
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