RESEARCH: Key takeaways from the latest Welded Linepipe and OCTG Market Tracker

The latest forecasts from Fastmarkets’ team of analysts are ready to view.

US market under pressure
US prices for welded pipe products were under pressure because market participants, especially distributors, have started to take steps to generate cash and were moving material if they were able to do so, even if it meant selling at low prices.
We expect more such “fire sales” in the coming months, but with the understanding that prices cannot fall much from their current levels.
Demand from operators was expected to be weak well into 2021, with oil prices remaining below breakeven levels in most production basins.
Among the energy tubulars, large-diameter linepipe producers were experiencing the strongest utilization rates, but these still remained below 50%. This was mainly a result of low prices making imports uncompetitive, so producers had the market largely to themselves.
Middle Eastern linepipe prices firm
Both import and domestic prices have gone up in the Middle East, with prices for longitudinal submerged arc-welded (LSAW) materials performing better than those for helical submerged arc-welded (HSAW) and electric resistance welded (ERW) products, as they mostly did in recent months.
Because projects among national oil companies (NOCs) were only delayed, and not abandoned, more demand will materialize in the future. Still, growth will be sluggish, in terms of both tonnages and prices.
European prices for llinepipe fall on weaker dollar
European prices fell month on month amid slow demand, but they were broadly stable in dollar terms. With a strong euro and limited demand prospects, mills have to keep their prices low to remain competitive globally.
Meanwhile, welded linepipe prices in Russia performed better than in Europe amid supportive market fundamentals and a positive price trend in the flat steel sector.
Asian demand for welded pipes booms
Aggregate Chinese production of welded pipes was up year on year in July, and mills were working to meet demand for large infrastructure projects.
While this has supported prices for both American Petroleum Institute (API) plate and oil and gas pipe this month, we expect overall demand to drop slightly in the fourth quarter, leaving those mills that make API pipes to fight for market share, which will create some downside for prices.
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Kimberly Leppold

kleppold@fastmarkets.com

Paolo Frediani

paolo.frediani@fastmarkets.com

Una Yin

Published

Kimberly Leppold

Paolo Frediani

Una Yin

August 27, 2020

17:58 GMT

London, Shanghai, Philadelphia