Carbon steel report: February 2018
On Friday, February 16th, Secretary of the U.S. Department of Commerce, Wilbur Ross, recommended that President Trump impose tariffs on imported steel products, including pipe. The recommendation was expected and has contributed to the increase of steel coil pricing to its highest levels in four years. Immediately, we can anticipate domestic mills will increase their prices across the board on ERW, CW and seamless products.
Despite the demand for finished goods not necessarily supporting the increases, a recommendation like this is enough to send prices up. Expect more increases, especially if President Trump follows through on Secretary Ross’ recommendations. Should that be the case, another consequence would be a major reduction in inventories of import pipe. Expect a decision from President Trump by April 11, 2018.
Weld Fittings & Flanges
Market conditions have not changed much since 4Q17. There are some supply issues on specific sizes of flanges, but inventories are expected to be replenished by end of 1Q18. There have been no additional price changes on BW Fittings since the 4th quarter. Pricing on both the weld fittings and flanges appears to be more stable after having risen sharply in response to multiple anti-dumping and countervailing lawsuits that were filed. Overall, supplies are adequate, but there are some extended lead times.
The Baker Hughes Rotary Rig Count on February 9, 2018, reported overall rigs in North America at 1,300 versus 1,093 one year ago. U.S. oil rigs are up 26 to 791, and U.S. gas rigs are up 35 to 184 compared to one year ago. Canadian oil rigs are up 14 to 221, and gas rigs are down 41 to 104 compared to 2017.
The top three areas for change compared to a year ago were in Permian, where rig counts were up 136; Haynesville was second, up 19; and Cana Woodford was third at plus 15.
At the time of this writing, WTI Crude was trading at $59.29 compared to $53.40 in February, 2017. As reported in Bloomberg Markets, the 52-week range has been between $43.91 and $66.66 for WTI Crude.
The NYMEX price reported for natural gas is $3.631 per MMBtu at the time of this writing. That is an increase of nearly 10.0 percent over 2017. Recent increases in the price of natural gas, as reported by Forbes contributor Jude Clemente on January 28, 2018, are due to a colder winter and higher than expected storage deficit.
Forged Steel Fittings
One domestic manufacturer implemented a 10.0 percent list price sheet increase effective February 5, 2018. To date, other domestic manufacturers have not followed suit. Importers are seeking out alternative sources as the largest import manufacturer has halted all shipments into the U.S. because of anti-dumping lawsuits. Supply issues may arise in 2018 as there could be inventory voids throughout the supply chain.
Many of the economic factors already indicated, above, are contributing to overall strong demand in the market place. Additionally, an industrial policy and infrastructure package would contribute to larger consumption of forged steel products.
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