(by Paul Vivian and Rick Preckel, www.prestonpipe.com) Market Monitor – Line pipe shipments have just about fallen off the map so far this year. The comparison through April is the worst for any product we cover with shipments down 45% from the same period last year. Small diameter shipments are off by 55% while large diameter shipments are lower by 38% from what was, admittedly, a pretty good year. Importers have taken the hit more than domestic producers with year-to-date domestic shipments down about 18.5% from the same period last year, while imports fell by 71.5%. Import share in small diameter fell from two thirds to 57% while large diameter imports accounted for just 13% so far this year down from 40% for the same period in 2019. On the small diameter side, we know that inventories were being liquidated prior to this downturn so it is possible shipments will improve some later in the year but it will be hard to count on growing demand. Based on our consumption model, despite these low shipment levels, we are still shipping in excess of demand. Williams recently announced that it was abandoning plans for the Constitution Pipeline after continued opposition from New York and environmentalists. The east coast has been a challenging region for pipeline projects. The success of environmentalists in getting the Obama administration to cancel Keystone XL has resulted in more opposition to pipelines. Stephen Ellis, energy and utilities strategist at Morningstar noted that other big projects that are confronted by a similar fight include the Mountain Valley pipeline and the Atlantic Coast project. Opposition is not focused just on the east coast however. Biden has already said he would cancel the Keystone XL if elected while Enbridge’s Line 3 Replacement Project continues to face permitting hurdles. Import Supply – The March import total was 83,999 tons which is about 15% more than the March licenses published last month. April import licenses are back down to 59,533 tons. The May forecast, with 13 of 20 days summed, is flat, at 60,964 tons. The big import item for the month of March 2020 was Carbon ERW over 4 ½” not over 16” OD, with 16,481 tons. The price was $734/ton. While low, this price is still up from the YTD by $17/ton.
Preston Pipe Report – The Line Pipe Market May 2020
14025 West Road
Houston, TX 77041