Reasons for the recent rise in the price of seamless steel pipes
Chinese seamless linepipe prices have jumped by $120 per tonne over the past month because of rising costs. With iron ore prices remaining elevated, scrap costs on the rise, and activity at steel mills curbed by environmental measures, steel billet has become difficult to source, bolstering the prices for seamless linepipe.
This increase was mirrored by import prices in the Middle East, largely because of offers from Chinese mills going up, but the market was on the rise even for suppliers in other regions.
In contrast, China’s prices for seamless oil country tubular goods (OCTG) have remained stable amid weak demand. And with prices being driven by costs, we believe that a downward trend for iron ore will allow Chinese prices to moderate in the second quarter of 2021.
Steel continues to support US prices
Seamless OCTG and linepipe prices in the United States held steady at the start of March, with seamless mills having the relative advantage over producers of similar electric resistance welded (ERW) materials due to the surge in steel substrate costs for welded alternatives.
The number of transactions remained modest, however, with operators and distributors buying only what is needed in the short term, given the high prices and the slow resumption of demand.
But strong steel prices will continue to support the seamless market into the second quarter, leaving seamless prices to peak in the third quarter. Even after that peak in pricing, we expect only modest price declines because pipe market fundamentals normally strengthen late in the year and provide price support.
EU margins reach bottom
With a global recovery in sight, we believe that European pipe producers are determined to pass along any further cost increases to buyers. For linepipe in particular, mills are already selling May production and seem to have found their footing.
Higher inventories weigh on the OCTG market, where it is possible to purchase from distributors at prices well below those for new-rolling material.
Source: Seamless Steel Pipe Supplier
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