(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor: 16” and Under Diameters –Continuing our discussion on the evolution of upstream line pipe demand we pick up where we left off last time. As the rig count rapidly improved after the recession, line pipe tons per rig increased at a slightly slower pace but remained more or less in line with drilling movement. There were opposing forces at work early in this time period – DUC counts were increasing, there was a slower buildout of infrastructure particularly in Appalachia, some inventory remained but wells continued to be more productive and the gathering OD (read weight) continued to increase. When the drilling rig count declined, some focus was shifted to infrastructure early on and the effects of the shift to liquids drilling starting in 2011 was resulting in more projects in the 12” – 16” range. These conditions continue today. Greater than 16” Outside Diameter – With a trade case and the 232 in the works, a lot is going on with regard to the supply side of the greater than 16” OD market. In 2017, about 995k tons of >16” were imported into the U.S. Two-thirds of the pipe is from countries in the trade case. A separate calculation shows us that 701k tons are from countries that are not exempt or are restricted by quotas. Korea imported 182k tons of large OD in 2017 and that number could go up if our understanding of the quotas is correct, but even so, large OD line pipe is in a position to experience some significant supply shift. Import Supply – February imports totaled 148,486 tons about 15,000 tons over the licenses. March licenses indicate a smll bump up to 156,388 tons. As in other products, this is a bit of a surprise that the level of imports remain this high given the uncertainity on the 232 when this pipe was ordered. The April forecast with 12 of 21 days tallied is 234,988 tons. This implies that buyers have made allowances for the possibility of tariffs. The top item for the month of February is Carbon ERW over 4 ½” not over 16”, at 45,570 tons. The landed price was $781/ton, up $5/ton from last month after two months of price drops that totaled over $100/ton.
