OCTG market outlook - what to expect
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.