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| OCTG Pipe |
The price for OCTG (Oil Country Tubular Goods) pipes in North America held steady in September, with the average price on an FOB (Free On Board) basis reaching $2,191 per tonne. Despite the stability in the OCTG pipe sector, overall market conditions are unfavorable, largely due to the downturn in the oil industry. During this period, WTI (West Texas Intermediate) oil prices dropped by 2.2% to $62.5 per barrel, following a steeper decline of 7.8% in August.
Positive Outlook for US Oil & Gas Industry
While the OCTG pipe market faces challenges due to reduced oil prices, there are some encouraging developments in the US oil and gas sector. According to Baker Hughes, the decrease in active oil and gas drilling rigs in the United States reversed in September. The number of rigs increased by 13 units, bringing the total to 549. This change signals that the reduction in drilling activity may have reached its low point.
Looking ahead, there are strong prospects for the OCTG pipe segment in North America. US energy corporations, recognizing the growing demand for gas and the expansion of LNG (liquefied natural gas) exports, are planning substantial investments in pipeline infrastructure. Over the next five years, these corporations are set to invest approximately $50 billion in the development of new pipelines. This infrastructure development is expected to increase demand for OCTG pipes, with companies already working on pipeline projects stretching more than 14,000 km across the US.
Turkish Welded Pipe Prices Under Pressure
In contrast, the market for welded pipes in Turkey faced downward pressure due to weak demand from Europe and the exhaustion of export quotas for October. According to Kallanish, Turkish welded pipe prices fell by $18 per tonne, reaching $575/t (Turkey FOB) in September. This decline occurred despite rising production costs toward the end of the month. Notably, the price dynamics closely mirrored the changes in hot-rolled coil (HRC) prices, which also saw a $7 drop to $537/t.
The Turkish market is also grappling with regulatory changes that add further pressure on manufacturers. A new domestic processing regime (DIR), implemented on October 1, requires exporters of certain products to source at least 25% of their raw materials from the domestic market. This move has increased the costs for Turkish manufacturers, who traditionally rely on imported HRC when local prices are not competitive.
ScrapInsight Commentary
The US OCTG pipe market remains stable despite unfavorable oil prices, buoyed by positive trends in drilling activity and planned investments in pipeline infrastructure. However, the Turkish welded pipe sector faces challenges from weak demand in Europe and rising costs due to new domestic sourcing requirements. The evolving dynamics of both markets underscore the importance of monitoring energy sector investments and regulatory changes.
