US energy tubular pricing remains pressured on nearly all fronts, with the sole exception of rising hot-rolled prices, Kallanish learns.
Several market sources predict that the US rig count will eventually fall below 800 and hover for the majority of 2020.
“As inventories are purged, and holes begin to surface, the domestics will try really hard to move transaction prices,” says one Gulf Coast buyer. “Flat-rolled is trying to bottom, [but] new mill production is currently selling at or below variable costs, so something has to change or they all fade to black.”
Ultimately, demand will rule the market, he adds. The question is when – and whether – that demand will resurface.
“I believe the next couple of quarters will be tough,” he says. “Lots of imports are heading this way, putting more downward pressure on the market. In the end, capital scarcity is the root of this cycle and the exploration and production companies are in the penalty box until they demonstrate that they have repented from cap ex spending which exceeds cash flow.”
Kallanish held its price for representative product P110 domestic welded casing Friday at $1,050-1,100/short ton. All prices are ex-works, domestic mill.
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