(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor: 16” and Under Outside Diameters –Last month we wrapped up our series on small OD line pipe and how it has evolved in this century. Basically, due to larger ODs to the pad and smaller OD projects, consumption per drilling rig is increasing. This fact, and the 232, may be a one-time opportunity for domestic producers that can manufacture API line pipe. The last time this opportunity presented itself from a supply perspective was right after the rash of Chinese trade case back in 2008-9 but the market never quite came together for the line pipe guys at that point due to the recession. Prior to that what was it, 20 years ago? Is this a period of ‘if you build it (and by that we mean add shifts) they will come’? We think so. We remind you of a note in a recent Preston Weekly where we pointed out that some product was trapped in the Permianand that oil price realized at the wellhead had dipped into the upper $50’s while open market pricing was in the low $70’s. Does that help your forecast outlook? Build out has to continue as operators struggle to get the product to the main. Greater than 16” Outside Diameter – The LOD line pipe sector is one place where it is pretty tough to prebuy product in advance of the 232 tariff imposition. How do you speed up project plans that normally have a very specific timeline and some regulatory control? Activity in this sector is a little behind other products. The buzz in the market suggests some pent-up energy. This should sort itself out in the next 60 days. More 232 news is right around the corner and we expect decision to impact this product area. Import Supply – Uncertainty has certainly fueled start and stop import levels leaving March totals at a low point of 148,825 tons. The April licenses show the other side of the scale at 259,211 tons, over 100,000 tons higher than March levels. We should point out that some of this variability is project related. The May linear forecast with 11 of 23 days reporting is 169,183 tons. We will see. The top item for the month of March is Carbon ERW over 4 ½” not over 16”, at 37,534 tons. The landed price was $795/ton, up $14/ton from last month and up for 2 months in a row. Given increases in the domestic supply the increase is rather small.
Preston Pipe Report – The Line Pipe Market – 05-25-18
Pipe Exchange
14025 West Road
Suite 100
Houston, TX 77041
- Phone: 713.934.9480
- Fax: 713.934.9490
- Email: sales@pipexch.com