RESEARCH: Seamless OCTG, linepipe prices static in China but rise elsewhere

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Chinese export prices for seamless oil country tubular goods (OCTG) and linepipe barely moved in February 2021, after rallying in January, because the holidays to celebrate the Lunar New Year curbed market activity sharply.
With the holiday now ended, we have seen some sharp jumps in round billet prices and we expect there to be a strong domestic market by the end of this month.
Still, we do not expect seaborne prices to jump in the next month, despite the strong domestic market in China, because global demand remains modest. It is also worth noting that iron ore prices are hovering around a recent peak but are expected to decline in the coming months.
At the same time, offer prices for linepipe delivered to the Middle East have remained stable, but OCTG prices in the region continued to rise amid expectations for comparatively stronger demand.
US prices climb
Domestic seamless OCTG prices in the United States have surged over the past month, with increases of $210-350 per tonne depending on grade. No other region saw such rises.
Costs continue to be a key factor in the increases, including strength in the market for hot-rolled coil (HRC). This pushes the price for electric resistance-welded (ERW) OCTG higher relative to seamless material, which is also supportive of seamless prices.
Support from scrap and iron ore prices is expected to last into the second quarter of the year, when steel and scrap prices are forecast to moderate. Improving fundamentals in the pipe and tube markets will limit the price declines, however.
Europe, CIS see scrap costs declining
Prices for seamless OCTG and linepipe in the CIS declined while those in Europe increased. But scrap prices in the latter region went down.
European mills did not react immediately to the scrap price decline because their margins have been squeezed heavily in recent months. But seamless demand is expected to remain weak in the first half of the year, and when scrap prices stabilize below the January peak, some pipe price moderation will be expected.
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Kimberly Leppold

kleppold@fastmarkets.com

Paolo Frediani

paolo.frediani@fastmarkets.com

Una Yin

Published

Kimberly Leppold

Paolo Frediani

Una Yin

February 22, 2021

17:17 GMT

Shanghai, London, Philadelphia