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MBR estimates that, by the end of 2012, the total market value of the oil country tubular goods (OCTG) market was about $33 billion.

The OCTG market is expected to show uneven growth, with the most rapid expansion likely to occur by 2016 as the global economy improves, and the demand for oil and gas improves with it.

The MBR report highlights that demand growth is likely to be concentrated in the higher-grade product groups, reflecting stronger demand from projects involving directional and horizontal drilling in more demanding environments, as well as the increasing development of “sour” grades – meaning the unconventional, deep and ultra-deep water developments.

The fastest areas of growth will be Africa, Nafta and Latin America.

The pattern of growth
The global OCTG market has seen contradictory developments over the past few years.

Global consumption rebounded after a slowdown in 2009, peaking at about 17.5 million tonnes in 2011. And for years, market growth has been fuelled by the extensive new oil and gas developments in the USA and Canada, as well as in the Middle East and Asia (excluding China).

However, OCTG demand was hit by the plunge in natural gas prices in the USA in 2011-2012 resulting from domestic oversupply, as well as by the slowdown in the rate of growth in the Chinese economy and the deepening European sovereign debt crisis.





These macroeconomic factors curtailed demand globally, leading to little overall market growth in 2012. In fact, OCTG demand in some of the regions actually shrank.

Nafta remains the largest welded OCTG consuming market. In 2012, Nafta drilling levels were fairly flat on 2011, but consumption of OCTG in tonnages grew because of the switch towards higher grades.

Nafta and the Other Asian markets are dominated by the heat-treated and alloy grades, primarily for offshore and shale gas applications, while China, CIS, and Africa are primarily non-heat-treated material price-sensitive markets. Latin America is equally divided as a market between non-heat-treated and heat-treated materials.




Production capacity use
In terms of OCTG production capacity, the average global utilisation rate stood at 40-70% in 2012, with the highest capacity utilisation rates seen in Nafta, CIS and Latin America.

The capacity utilisation rates for seamless pipe production showed marginal growth in 2012, while the welded sector saw lower output on slower consumption growth compared with seamless material, as well as because of the worldwide expansion in capacity.

Intensifying drilling, directional drilling and new projects have contributed to the shift in demand towards higher OCTG grades. Nevertheless, non-heat-treated material accounted for about half of total demand in 2012.




The market share of non heat-treated material will fall below 40% by 2020.

While Africa will be the region with the strongest growing demand, Nafta will see the largest new capacity additions by 2016, pushing further regional manufacturing potential and prompting growing self sufficiency in the long-run.

Methodology and coverage
The 2013 edition of Metal Bulletin Research’s best selling strategic forecast study – The Five Year Outlook for the Global OCTG Industry is the result of four months of meticulous research involving face-to-face or telephone interviews with more than 100 industry participants.

The study’s coverage was expanded this edition with assessments of the total theoretical dedicated OCTG capacity in tonnes on a by-company basis and with an overview of the regional output across the size ranges.

For the first time, the study comes in two parts: In addition to the traditional report, there is a special standalone electronic OCTG Premium Company Production Database, which provides a new level of market intelligence as it offers OCTG production data for more than 120 mills globally for 2011 and 2012, covering both welded and seamless material.

This premium data also provides company-by-company utilisation rates for 2011 and 2012.

Who is the report for?
The Five Year Outlook for the Global OCTG Industry is required reading for all OCTG producers, upstream companies, and governmental bodies.

The study covers about 95% of the global manufacturers of seamless and welded material.

In addition to profiling and statistical information, the report includes a detailed investigation of global supplies, and will provide crucial insights into the industry’s current and the historic trends.

This analysis will help OCTG market participants to shape their strategies to cater for the rapid changes in the global OCTG market.

The report’s analysis is based on trend discovery and includes forecasts out to 2020, concerning OCTG shipments, trade and consumption on regional as well as a country-by-country basis. 

For a copy of The Five Year Outlook for the Global OCTG Industry, co-authored by Metal Bulletin Research consultant Roman Kucinskij, please call +44 (0)20 7779 8000 or contact Brian Levich, consultancy and special projects director, blevich@metalbulletinresearch.com, or call +44 (0)20 7556 6020.