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Global pipe industry facing heat as dip in crude slows down pipeline projects

Caused by a worldwide price fall of crude oil and gas, a sense of crisis on export of steel pipes like seamless steel line pipes, oil country tubular goods and so on including UO steel pipes is mounting as new projects have been halted and even existing projects are felt to have slowed down.

As there were no large scale projects to use UO pipes other than those in Russia in the 2nd half of this year, pipe mills remain at a tough situation without projects regardless of a price drop of crude oil and gas.

Oil and gas companies are seen to have begun to review their future production plans and procurement of necessary materials like OCTG, linepipes and so on.

Until these reviewed plans will be executed, there seem no new negotiations on pipes. Meantime, as existing production of oil and gas continue, there is demand for such existing production activities. During reviewing plans by oil and gas companies, they are likely to focus on inventory clearance, and a source predicts for export quantity to be worse by 10-20% than before. The situation also beings to be impacting on development of shale gas but as Japanese OCTG have a lower % to be used for a shale gas development, those are less affected by it to that extent.

Meantime, Chinese mills are mounting an export offensive on seamless linepipes. Their price is reported to be USD 600 CFR. Such price is close to half price of Japanese products, and it is concerned that such moves to use Chinese products temporarily for the time being will grow in order to cut production costs. As the valuation on Japanese products have become established and have been differentiated from Chinese products, China’s prices have no direct impact on those of Japan. However, it is concerned for prices to be dragged down by such cheap prices.

Cheap imitation of couplings begin to have been marketed. Couplings of Vallourec and Tenaris are effective in the marketplace but imitation products of them have gone on the market. There is a possibility for those products to be used even temporarily in a case of cost reviewing. It is concerned that such products may lead to a price cut pressure of quality products.

Under the circumstances, it is in an inevitable situation that Japan’s export of OCTG, linepipes and UO pipes slows down for the time being.

Source – TEX Report

Zhejiang Yaang Pipe Industry Co., Limited

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