US prices continue to hold
Seamless oil country tubular goods (OCTG) and line pipe prices remained unchanged for the third straight month in June, and we expect them to remain stable through the summer before edging higher on the back of a measured rise in drilling rates.

The lack of price movement in recent months does not indicate balance in the market. Rather, prices are at their floor under the current conditions with no support to increase.

Raw materials support Chinese prices

Chinese demand was strong in the first half of June, and this helped mills increase operating rates while inventories fell. And while demand has more recently started to slide with the rainy season in the south hitting construction activity, raw material costs will continue to provide support to prices.

European demand to remain limited

European demand for seamless OCTG and line pipe is expected to remain low through 2020 and into at least the first half of next year, and this is likely to result in lower prices in the coming months. Traders have been reluctant to cut prices on OCTG stock so far, but there may be some clearance sales later in the year.

Middle East continues to buy CRA
The Middle East-North Africa (Mena) market remains interested in corrosion-resistant alloy (CRA) pipe, with new and ongoing projects. That said, Japanese mills have cut their offers for 13Cr L80 substantially, and there is room for further price cuts.

In the carbon steel line pipe market, offers from Tier I Chinese suppliers have become more aggressive. And there is rising interest in the region from suppliers that are struggling with sales elsewhere that do not typically supply into this Mena spot market. 

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