A surging hot-rolled coil market drove price increases in the ERW and HSAW segments both in the United States and Europe. While there were encouraging signs in terms of fundamentals such as drilling activity edging higher in the US and some European interconnection projects moving forward, those are still too weak and insufficient to influence the degree of the recent price movements.

In fact, LSAW linepipe prices did not move in either region because prices are weaker in the plate market, where the demand picture is less buoyant given its exposure to the energy industry.

Middle East waits for FIDs
Meanwhile, the Middle East market weakened this month, especially for ERW linepipe, but prices remain in a wide range. Chinese suppliers, however, raised their offers to reflect higher costs. We expect the Chinese market to continue to provide a floor to landed prices this quarter. The Middle East and North Africa (Mena) region now waits for a number of projects that have been delayed – but not abandoned – because the pandemic to go through and get to tendering stage. Demand should rise steadily next year, but further delays are possible.

China prepares new five-year plan
The Chinese Communist Party Plenum released the 14th five-year plan which should outline investment plans for the oil and gas industry from 2021 to 2025. Meanwhile, targets for the 13th plan have yet to be met, with 1,000 km of crude oil pipelines, 4,000 km of refined products pipelines and 19,000 km of gas pipelines still left to build.

While the pandemic has slowed operations, we expect there will be an attempt to catch up, which would drive domestic demand. And there may be some tightness in supply in the north of the country due to requirements to reduce pollution because of environmental concerns in Tangshan.

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