Another quarter wrapped; time to zoom in on the results of our exclusive OCTG inventory yard survey. First, we want to give props to the cast and crew who work behind the scenes to make this production possible each quarter. Much of the credit goes to the numerous supply chain professionals who count pipe at truck terminals, mills, processors and inspection yards throughout the lower 48 every three months. Let’s cue the results, shall we.
Q3 could easily be titled, “Back to the Future,” as rising L48 inventories returned to levels last seen in 3Q20. Meanwhile, OCTG inventories outside the tri-state region (TX, OK, LA) contracted to a low not witnessed since 2Q06. As drilling is increasingly concentrated in the top-grossing Permian Basin, the deterioration in this metric over the past 17 quarters isn’t a huge surprise.
A close-up analysis of the inventory data yields a high degree of granularity into the supply chain we wouldn’t have without the benefit of this survey. What we discovered is presenting a challenge to on-time deliveries. The catch-22 again this quarter is the hike in inventories from the tri-state processor segment. While import cargo shipments have been fast and furious in the past few months the congestion hasn’t been limited to the ports, it’s spilling over into a number of processor yards.
Contributing to the processor backlog and growing plain end pipe inventory are a number of factors outside of the earlier labor issues that are finally stabilizing. We discuss each of these in detail in our October Inventory Quarterly Report, all of which reinforce the ongoing case for “tight” OCTG supplies. We also discuss the various possibilities that led to the chill we witnessed in Octobrrr OCTG prices.
Turning to coming attractions for the year’s end: our 2023 annual OCTG forecast is set for worldwide release next month in November. So, will the coming year be a blockbuster or just a bust? Talk about a “cliffhanger!”
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 CTAP, LLC