(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor: 16” and Under Diameters – Last month we promised a series on the influences of drilling changes since 2000 on small diameter line pipe consumption. The obvious culmination of this series will be our thoughts on what small diameter line pipe demand will look like in the mid-term.
Significant events in ’00-‘05 period included a ‘gas frenzy’ as prices topped $10/mcf in the winter of ‘00/’01. This resulted in infill drilling to take advantage of those prices in what was going to be a higher for longer market. Following that, we had the collapse of Enron which upended the pipeline/gathering system construction model. Finally, to round out this first period, we had the early expansion of horizontal drilling. All these factors limited small od line pipe consumption on a per rig basis. Greater than 16” Outside Diameter – While shipments declined throughout the 4th quarter, January preliminary data shows improvement. Quote activity continues to improve according to our sources. Import Supply -December imports were about 10% above the license total at 136,002 tons. The January licenses show a return to higher volumes at 209,791 tons. The February forecast, based on 9 of 19 days, shows a drop to 112,767 tons. Possibly expecting 232 news? The top item for the month of December is Carbon ERW over 4 ½” not over 16”, at 45,943 tons. The landed price was $788/ton, a $90/ton decrease from last month, offsetting the increase from last month and reversing the trend of increases that had lasted 5 months.