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  • Writer's pictureSusan Murphy

OCTG 2H22: Call of the Wild

The OCTG Situation Report June 2022
Photo Apache Corp. Courtesy © Jim Blecha,

Every June we confer with colleagues from all walks of the OCTG supply chain to examine their outlook for the balance of the year. This time around the annual exercise was tantamount to “a walk on the wild side,” with the prevailing sentiment for the OCTG market in 2H22 likened to a zoo. Maybe it’s the feeding frenzy that a shortage of OFS materials has sparked, or perhaps it’s the many monkey wrenches folks are encountering in their attempts to meet demand, either way most are doing their best to grin and bear the protracted situation.

The fact is, in many respects, this is a piping hot, “make hay while the sun shines,” once-in-a-generation market. Nevertheless, this intensity comes at a price and it’s one that both buyers and suppliers are confronting. The costs of participation can be measured in real dollars and legitimate stress as mills, processors, distributors, and buyers all attempt to control what feels like an 800-pound gorilla that’s been unleashed on the oil patch.

The rumor mill has it that we’ve yet to see the worst of the supply crunch. Onboarding labor remains a chokepoint in ramping up new production, domestic mill outages planned in the near term invite further constraints, threaders are backed up, coating facilities are running behind, exporting countries that are open for business (outside of the war and the recent trade case) are now dictating the mix they’ll produce, and sources for welded coupling stock are limited. Oh, and lest we forget, there’s a severe shortage of seamless tubing. Yes, the knock-on effect of the pandemic is in full swing; the consequences of which are the pain points populating our monthly pricing monitor.

We asked participants what might ease this upheaval and received a variety of potential solutions. Among the suggestions, one of the most likely is that many operators facing inflationary pressures while depleting Capex budgets are anticipating modestly muted activity levels in Q4 offering mills a chance to catch their collective breath heading into 2023. And while all of this makes for a chaotic market at present, improvements are in the pipeline. We discuss these in our June market intel.

With prospects of the ‘crude’ awakening continuing through much of 2023 coupled with a more hawkish monetary policy, many pro-active majors are clamoring for a seat at the 2023 table, hoping OCTG prices won’t have them over a barrel. So how does this situation play out? Is the elephant in the oil patch the dynamics between the ‘have mores’ and the ‘have less?’ The oil patch has spoken and the only thing that seems certain is that uncertainty will dominate the lion’s share of sentiment over the next 12 months.

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Photo Apache Corp. Courtesy © Jim Blecha,


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