OCTG market outlook - what to expect

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SCM Daleel - Admin

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Here is our outlook for OCTG market for the next 3-9 months

  • Globally, prices are on the decline for the last 9-12 months and it seems that there is finally a good degree of stabilization, in particular for newly produced OCTG. There is still a growing price pressure on holders of inventories, to reduce prices further. Premium grade products are expected to slide down even more, as a result of weaker demand compared to commodity products. Yet, fluctuation in the cost raw materials (Nickel) may cancel this out.
  • The spot market is weak, whereas long term contractual arrangements are generally on track, such as vendor-managed-inventories projects.
  • Demand is weak and may not recover till 2022, many projects postponed to 2021.  We don’t expect any new large awards/tenders to be announced until the end of 2020.
  • Some non-US suppliers get a relief, by an offset of sustained and higher margins activities in other parts of the world, such as the Middle East and Brazil.
  • Globally utilization levels of mills are 65%-75%, which means there is ample spare capacity. Coupled with the cost of raw materials ( nickel in particular), there is sustained pressure on OCTG producers to keep unit costs down.

Go to our OCTG category section 

Comments

Verified User0

2020-09-15 09:18:12
KOC has come out with two tenders for 3 year supply term contract, which will drive some activity in the otherwise dead market.

Jon C.

2020-09-20 02:06:07
I read not so long ago that KOC were really struggling during the downturn. Is this just replacing old contracts or driven by some increased drilling activity?

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