(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor – Natural gas prices are stuck in a rut largely at the mercy of mother nature both here and abroad. The dependence on weather abroad is a product of the evolution of export capacity that operates on the margin. In other words, it is demand for the last BTU that drives the price for the other BTUs because US industrial demand is slow-growing and predictable and US supply keeps increasing. As Freeport LNG comes back online starting later this month – although there are indications that it might be later – pricing will move up. How much depends on where the demand, exports, and production equation comes out. On the topic of LNG (which means pipelines to you and me), there were several positive events over the course of the last month. First, Germany unloaded its initial LNG cargo at the country’s first floating liquefied natural gas (LNG) terminal in the North Sea town of Wilhelmshaven. On January 14, the second German LNG terminal officially started operations in the Baltic Sea town of Lubmin. Germany hopes to be able to import 30 bcm of LNG by the end of 2023. Second, Japanese companies signed several offtake agreements in late December with a preliminary agreement lasting up to 10 years with Oman LNG and a 20-year deal with US-based Venture Global. Separately, Japan’s top oil and gas explorer Inpex Corp announced on a 20-year deal also with Venture Global LNG to import 1 million tonnes/year from the firm’s Louisiana project due to begin construction in 2023. The new supplies could help Japan diversify from Russia’s Sakhalin project which accounts for 9% of Japan’s total LNG imports of 74.3 million tonnes per year. The US International Trade Administration (ITA) published amended final results in the large-diameter line pipe case against Evraz. Just last month the anti-dumping rate moved up to 36.02% from 7.9%. Subsequently, Evraz challenged the math on the new rate and the ITA agreed. The new amended rate is 26.15%. Import Supply – The November import total was 79,490 tons which was nearly 30,000 tons below the license tally from last month. December import licenses are up at 134,895 tons. The January linear forecast, with 11 of 22 days summed, is back down at 54,364 tons. Wild swings in volume but prices are steady. The top import item for the month of November 2022 was carbon ERW, over 4 ½” OD not over 16” OD, at 23,936 tons. The price was $1,414/ton which is up $11/ton. The price is steady.
Preston Pipe Report – December 2022
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