(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor: 16” and Under Outside Diameters – Comparing this year to last in the small OD sector finds us ahead, in terms of shipments, by about 265k tons YTD using licenses and estimates for June. Of that, the domestic producers enjoyed about 75k tons of that increase. In the OCTG sector we pointed out that the data suggested some 232 pre-buying in mid-2017.
While small diameter line pipe is not as directly correlated to the rig count as it used to be, there are signs, as identified in the chart below, that there was some line pipe pre-buying as well during the same period. Domestic share was 36% in the first half of last year vs 34% in the second half. The domestic mills held only 28% of growth of small OD shipments 1H18 vs 1H17 which was due primarily to rising steel costs combined with tariff free quotas from select countries. Greater than 16” Outside Diameter – The highly publicized takeaway capacity issue from the Permian is expected to be solved by the completion of 3 pipelines by the end of 2019. One of those, the Cactus Pipeline (Plains All American Pipeline) just recently had its exclusion request for 155k metric tonnes of 26” ERW, 70’ ea, X65 line pipe, denied. This is an interesting case because there are certainly domestic producers of 26” pipe, but no domestic manufacturer has 26” ERW capabilities which, in general, is a lower cost method of manufacture vs DSAW or HSAW. According to the SteelBenchmarker, plate (used in DSAW) prices in the U.S. in the latest poll were about $990/ton verses $912/ton for base HRB prices. Do we think the pipeline is in jeopardy? Not likely but costs may be higher. As an aside, imported line pipe in the most current months have pricing as follows for the 3 methods of manufacture; Alloy LSAW – $1,009/ton, Alloy HSAW – $1,400/ton, Alloy ERW – $1,335/ton. Import Supply – May imports were very close to the licenses at 175,354 tons. The June licenses show a small drop to 167,256 tons. The early forecast for July, with 11 of 21 days tallied, is a return to a larger number at 198,307 tons. The top item for the month of May is Carbon ERW over 4 ½” not over 16”, at 35,228 tons, a huge drop in volume for this category this month. The landed price was $867/ton, up $81/ton from last month.
