Prices for energy tubulars may depend just as much on downstream oil-drilling fundamentals as on upstream substrate costs, however.

Section 232 buoyed prices for domestically produced OCTG and line pipe en route to multi-year highs in the spring of 2018. Since then, energy tubular prices have declined in every month except one, doomed by volume increases at the mills and weaker crude oil prices.  

The performance mirrored, somewhat, the fate of domestic HRC, which rode a Section 232 wave to decade-long highs in July before losing all of its 2018 gains by January 2019. Since HRC turned in a positive month of February, the welded mills think it may be their turn soon. 

"We are hopeful for a rebound later in Q2 given the trend in HRC prices," a welded OCTG mill source said. 

Fastmarkets AMM's pricing assessment for US domestic X52 line pipe ended February at $1,200-1,260 per ton fob mill, down from a 2018 peak of $1,420 per ton achieved in June. The assessment had fallen in five straight months. 

Fastmarkets AMM's pricing assessment for US domestic seamless high-collapse P110 casing dropped to $1,420-1,470 per ton fob mill in February from a 2018 high of $1,775 per ton at the midpoint of April's range. That price had fallen in eight of the past nine months.

The cost of HRC substrate didn't peak until the summertime, but it too went into a tailspin and lost 28% of its value by the end of January 2019. 

Fastmarkets AMM's hot-rolled coil index achieved a high of $45.84 per hundredweight ($916.80 per ton) in July before tracking downward and landing with a thud at $33.13 per cwt ($662.60 per ton) on the last day of January. It closed February at $35.14 per cwt ($702.80 per ton).

The energy-steel items began falling earlier, but that doesn't mean they are ready to follow coil's upturn immediately, according to a southern distributor. 

"The [welded] mills have been making record margins and their prices have not come down as fast as the coil," this distributor said. Pipe prices "have room to come down more."

It's also not a given that HRC will hold onto its February gains, judging from the buying habits of the energy tubular distributors. 

During TMK's fourth-quarter earnings conference call in March, Ipsco Tubulars president and chief executive officer Piotr Galitzine said customers of welded items had slowed their buying under suspicion that hot-band prices might fall again. In December, KeyBanc Capital Markets analysts issued a forecast that the US domestic HRC price would average less than $35 per cwt ($700 per ton) for 2019 - slightly below its level at the end of February. 

Downstream, oil-and-gas fundamentals appear to be supportive of OCTG and line pipe. The Baker Hughes rig count was holding relatively steady above 1,000. The soaring number of drilled-but-uncompleted wells in the Permian Basin continued consuming casing and would require tubing upon completion. West Texas Intermediate crude oil closed February trading above $55 per barrel, up from $43 per barrel at its December trough. 

Only a breakdown in discipline by the Organization of Petroleum Exporting Countries and ally Russia, or the sudden unpredictable intervention by President Donald Trump's administration, might doom the WTI price and put the brakes on drillers' spending, according to a trading source. 

"If it stays around $55 for a month or two - and it looks like it might - and Donald Trump keeps out of it, the forecast is bullish," the trader said.