OCTG Calm Before the Storm or Smooth Sailing Ahead?
This month we thought it would be an interesting exercise to look back on the agony and ecstasy of the past three years in the oil patch—a period where events in the oil patch churned so fast and furious, they practically wrote themselves into our Report. Could it be we’ve now reached a lull, or is it that the market’s been so ’noisy’ for so long the quiet is almost deafening? Even OCTG spot market prices seemed to be in alignment in May as the pace of the deterioration eased. Dare we ask if this is the calm before the storm, or might we be in for some smooth sailing?
It was two years ago this month when we reported raw materials were ‘steeling’ the show and putting OCTG producers through the mill. Turns out 2022 was the most volatile year ever recorded for North American sheet prices, as well as once-in-a-generation record high OCTG prices. During much of these concurrent events, welded mills were dealt a consequential blow from the one-two punch of the pandemic converging with the hot mess inflicted by unprecedented hot rolled coil prices.
The welded downcycle lasted from 2Q20 to 1Q22 when ERW producers began to see the light of day once again. Fast forward to 4Q22 when HRC prices fell on fears of a recession in 2023 spawned by higher interest rates. No sooner did that brief price respite happen when the underpinnings of the market shifted dramatically yet again in the final days of 2022. How does this play out in 2023? Read our analysis in the May OCTG Situation Report.
With the release of March import stats in May we were able to close the books on the first quarter of the year. This allowed us an opportunity to view Q/Q stats in great detail, which we did in this month’s market intel. We also discussed our predictions for drilling activity and pricing through the EOY.
So, can we claim no (breaking) news is good news? At the very least, we can declare it’s welcome news this month. Now, all those in favor of a May without Mayhem say, ‘aah.’
NOTE: Our monthly blog posts offer a slice of the content we publish in The OCTG Situation Report® every month. To subscribe and/or request a complimentary copy of our Report for review please visit: https://www.octgsituationreport.com/subscribe.
Photo Courtesy Southwestern Energy Company