(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor <= 16” Diameter – Small diameter line pipe shipments have been trending downward since June which was the highest import month of the year through November in small diameter line pipe. This is no surprise as activity bottomed out in August and the downward trend in shipments was due to the delivery pattern of orders placed earlier in the year. December licenses, if the imports they represent are all entered during the month and all are for consumption, will represent the new highest small diameter import quantity of the year – all in a period where activity is still weak. It is possible that a portion of these imports are headed for inventory in a Foreign Trade Zone, but we won’t know that until early February. The bulk of these licenses consist of Korean material at a price of about $656/ton including freight to the port. Keep in mind that Korea does not pay S232 tariffs but has a quota instead. Using up the quota may explain the bump in volume. >16” Diameter – In the chart of large diameter shipments shown below, it is important to note that shipments have not been this low since 2009 and prior to that, it was 2006 when financial markets were still dealing with the fallout from the Enron collapse. The challenges for the large OD sector on the demand side consist of lower production, sufficient takeaway capacity on most basins, and increasingly difficult pipeline project permitting – all well-worn topics. On the supply side, while business prior to Covid was strongly domestic-focused, there have been some capacity expansions that have spread today’s limited business a bit thinner. One impending issue for large diameter pipe is the fact that the Alberta government said that if Biden cancels Keystone XL, they would be selling “enormous quantities of pipe” to offset the $1.1B invested by the Canadian government. Import Supply – The November import total was 26,575 tons which was about 7,000 tons below the license tally from last month. December import licenses show a big jump indicating 84,799 tons. The January forecast, with 12 of 20 days summed, is at 32,454 tons. The top import item for the month of November 2020 was Carbon ERW over 4 1/2” OD, not over 16” with 6,491 tons. The price was $650/ton. This price is flat with recent months.
Preston Pipe Report – January 2021
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