For those seeking asylum from the mid-‘year’ crisis hereby dubbed the third quarter slump, the results of our exclusive 3Q23 OCTG Inventory Yard Survey may be the least scary thing of the festive fall season. In fact, for most of the adults in the room, there’s nothing quite like taking a bite out of inventory stockpiles to raise one’s spirits.
No tricks or sleight of hand involved here. We have only to thank the many yard hands throughout the entire supply chain, across the L48 involved in this labor-intensive analysis that enable us to produce and deliver the most accurate OCTG inventory updates and all associated data points so that our subscribers can better navigate the course ahead.
And thus, we’re able to treat our subscribers to the results of our most recent survey, revealing L48 inventories of prime, finished OCTG were actively exorcised in Q3. While each segment of the supply chain did an admirable job of scaling back inventories, we must applaud the determined effort of a dead serious, group of OCTG distributors who reported their biggest drop in stocks Q/Q since 2015. Heavy inventories weren’t going to bedevil their operations at the end of this year.
Our survey produced a mixed bag of results in every product category (both SEAMLESS & ERW) in the tri-state this past quarter. All of the relevant stats derived from our exclusive inventory analysis are discussed in our October market intel.
So, let’s unpack the stats. Not unlike the last couple of years in the oil patch, there’s a lot brewing in the OCTG market. As we analyze all of the existing indicators, the good news is nothing should cast a pall on 2024. With WTI in flux but far from the fear of the ghost of oil price plummets past, and Nat Gas creeping into the $3/MMBtu territory (thanks to reduced Permian Basin Nat Gas production from slowed drilling activity), the need to push the panic button has been averted—at least for now. As with oil, so goes OCTG: when demand starts to outstrip supply, inventories are drained. And when inventories diminish, prices rise. Our most recent inventory yard survey suggests all the hallmarks of a tightening market are falling into place. Fortunately for buyers we’re also heading into the end of the year, which buffers pricing to a degree as most sellers are looking to unload surplus stocks before the taxman cometh. This means deals can still be found, but not for long.
We closed this month's quarterly Report with our thoughts on inventory levels, hydrocarbon prices, order books, and E&Ps next moves. In conclusion, 2023 might not go down in history as a “killer” year, but it won’t be dead in the water either!
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