(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor <= 16” Diameter – In 2020, prior to Covid, the small diameter line pipe segment was in an inventory liquidation mode. Weakening rig counts flipped that around but overall for the year, we believe inventories will end lower. Our projection for 2020 suggests about 700,000 tons of small diameter line pipe shipments which would represent a record low with 2009, at 871,000 tons, the next lowest. Keep in mind that horizontal drilling was a smaller part of the mix in ’09. For 2021, we expected modest growth in small diameter line pipe shipments with maybe a 10% improvement. This would expand if rig count growth is faster than we currently anticipate. >16” Diameter – In the large diameter segment, we expect shipments to end up at around 1.5 million tons in 2020 barring any significant late-year project shipments that we didn’t account for. In 2021, we expect a slight improvement which is small enough to not be visible in the rounding. The disruption in the oil and gas sector brought about by Covid is likely to continue through 2021. Reduced production will result in lower pipeline capacity utilization. It will take some time for production to recover to the point where additional pipelines are necessary although that looks different region by region. Import Supply – The September import total was 45,503 tons which was about 2,500 tons above the license tally from last month. October import licenses are lower indicating 28,664 tons. The November forecast, with 11 of 20 days summed, is up to 48,246 tons. The top import item for the month of September 2020 was Carbon SAW over 16” OD, not over 24”, with 17,277 tons. The price was $1,109/ton. Since this is normally project-specific, price comparisons are not always on track but this is well within the range of this category YTD. This is a large monthly quantity for this category as YTD volume, including this number, is just over 42,000 tons.
Preston Pipe Report – The Line Pipe Market – November 2020
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