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“With the Iran war, there’s no more pipe leaving [the Strait of Hormuz] out of the [United Arab Emirates],” Schlueter explained. “The UAE is in the top five importing countries, specifically surface casing. They were the largest importer of standard pipe last year.”
Previously, the UAE was importing 6,000-8,000 tonnes of pipe, but now “it’s almost nothing,” he said.
Shipments bound for the US from the UAE have been stalled in the strait since February, according to Schlueter, with most of that tonnage already sold.
“So, the spot market’s gone crazy,” Schlueter said.
Just 200 tonnes of oil country tubular good (OCTG) steel arrived from the UAE in April, according to the US International Trade Agency’s (ITA) steel imports monitor, down from 11,100 tonnes in March.
Prices for OCTG have risen since the US war with Iran began, and current market conditions will only continue to drive prices up, Schlueter told Fastmarkets.
“I think we will be very close to $2,000 a ton for surface casing,” he said.
Fastmarkets last assessed the monthly steel OCTG API 5CT – Casing J55, fob mill US at $1,375-1,450 per short ton on April 8, rising from $1,350-1,425 per ton in March. Domestic OCTG prices were last over $2,000 per ton in January 2023.
And Fastmarkets assessed steel ERW line pipe (X52), fob mill US at $1,500-1,650 per ton on the same day, rising by 3.28% after two months of stability.
Recent trade defense measures taken by the US government will also curtail incoming imports, Schlueter said.
“You got the anti-dumping [cases] that just got filed on Taiwan, UAE and Austria,” Schlueter noted. “Well, those three [importers] are in the top five importing on OCTG into the United States. That’s significant tons that are going to be affected.”
But “they were dumping,” according to Schlueter
Global tightness in the hot-rolled coil market is also constricting availability.
“South Korea is having issues getting coiled [steel], and so are my domestic mills,” Schlueter said. “And even over in Taiwan — they bring a lot of pipe over here too — they’re having issues getting coil too.”
US availability of hot-rolled coil is also feeling pressure amid the 50% Section 232 tariffs, which have significantly curbed imported material. Long lead times and domestic mill outages have also limited supply.
But the steel tariffs “are doing what they are supposed to do,” according to Schlueter, despite the lack of availability.
“In the [1990s], we had 30 steel manufacturers. Now we’ve got four [steelmakers] that have 80% of the market share. That’s not good,” Schlueter argued. “The reason that happened is because imports flooded the market, and everyone either went bankrupt or consolidated.”
Still, the spot market shortage for steel pipe will only get worse as demand accelerates, according to Schlueter.
“Now you’ve got demand coming back. You’ve got these AI data centers chewing up a massive amount of resources, and now oil’s come back,” he said. “I think the entire supply chain is being rewritten right now.”
“There hasn’t been any projects for over a decade because of the political environment,” Schlueter explained, “and now with [US President Donald] Trump, they’re trying to get everything they can get in the ground before the new president gets elected.”
Stronger oil prices will also spur demand that has been lackluster in recent years, according to Schlueter.
“I am hearing that some oil companies are going to start adding [rigs],” he explained. “Our sales from February to March were four times higher.”
Amid the market uncertainty and every-changing dynamics, “I just tell everyone to buckle up,” Schlueter said.
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