(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor: 16” and Under Outside Diameters – There has been a lot of discussion about discounts applicable to Permian basin oil due to the fact that takeaway capacity is constrained until additional pipelines come on stream over the next 18 months. New infrastructure in the 16” and under size range will be necessary to feed the additional capacity. This demand should largely benefit domestic producers, if they seize the opportunity presented by the 232, as we discussed last month. We believe we are again seeing a situation where dual or triple stenciled small diameter import line pipe is being utilized in standard pipe applications. See the standard pipe section for more information. Greater than 16” Outside Diameter – The DOC has postponed the preliminary ruling on the LOD welded case versus 6 countries until August 20 from June 18. All but S. Korea are subject to the current 232 tariff and Korea has a quota that includes the small OD sector as well. Import volume of these products from these countries amount to a whopping 84% of the total. So here are the variables. As of May licenses, Korea is about 319,000 tons into a 472,000 ton quota (for all line pipe). There is a 25% 232 tariff on the balance of the countries. U.S. hot band prices are up over 40% from the beginning of the year and may have peaked. A big unknown is what will the preliminary duties be? If small and given U.S. hot band prices, volumes will likely remain largely the same. If the preliminary duties are significant, import volumes could be greatly affected. A final ruling will not come down on this case until Q2 – Q3, 2019. Import Supply – April imports bounced back to 277,944 tons while May licenses show a drop to 172,036 tons. As noted last month, there is some roller coaster activity due to projects just before the 232 action. The June forecast, with 8 of 21 days tallied, is 131,762 tons and if true, it will be the lowest import month since January 2017. The top item for the month of March is Carbon ERW over 4 ½” not over 16”, at 128,012 tons. The landed price was $786/ton, down $9/ton from last month breaking a 3 month streak of increases. A drop in price in our mind shows reluctance to buy so close to the 232 tariff deadline.
Preston Pipe Report – The Line Pipe Market – June 2018
Pipe Exchange
14025 West Road
Suite 100
Houston, TX 77041
- Phone: 713.934.9480
- Fax: 713.934.9490
- Email: sales@pipexch.com