Prices for Turkish welded pipes rose by $3 per tonne over the same period

Regional pipe markets are showing mixed trends, reflecting the specific characteristics of pipe products. At the end of July, prices for welded pipes in Turkey, intended for construction purposes, rose slightly, whilst quotations for oil and gas OCTG pipes in the US stabilised at $2,563/t.

USA

Average prices for OCTG pipes on North America FOB terms remained stable at $2,563/t in July. The market has already partially adjusted to the conditions of geopolitical and price uncertainty, anticipating high oil prices in the medium term. When oil prices fall in the short term, prices for oil and gas pipes remain stable.

The trend in the number of active drilling rigs in the US also confirms this pattern, demonstrating growth in drilling investment. According to Baker Hughes, the number of oil and gas drilling rigs in the US – an early indicator of future production – stood at 588 at the end of July, an increase of 15 units over the month.

WTI prices were highly volatile throughout July: they were significantly lower at the start of the month but rose towards the end against a backdrop of geopolitical risks in the Middle East. Over the past month, average WTI prices fell by 8.2% to $84.2/barrel from $91.7/barrel in June. The main drivers of the decline were the easing of geopolitical risks in the Middle East and an increase in oil production. However, the situation remains extremely unstable.

Turkey

According to Kallanish, prices for welded pipes rose slightly in July – by $3 to $658/t (Turkey FOB). Despite weak demand, Turkish pipe producers are attempting to maintain prices at $640–665/t (FOB) following the previous decline. The main reason for the fall in demand was a significant reduction in import quotas by the EU (from 99.4 thousand tonnes to 59.8 thousand tonnes) and the UK: actual shipment volumes now significantly exceed the new, lower limits.

Spot demand remains in Georgia, North Africa and the Balkans. Producers are able to maintain prices thanks to high capacity utilisation following successful sales in May–June. Prices for raw materials (hot-rolled steel) stand at $600–620/t (EXW), with a downward trend under pressure from quota restrictions.

The sector is facing a fall in domestic demand and a decline in exports. The main external factors are the 30–40 per cent cut in EU quotas, US tariffs of up to 50 per cent and instability in the Middle East. The key problem is the high cost of raw materials (HRC) due to domestic duties and new IPR regulations requiring 25 per cent of raw materials to be sourced domestically, which reduces the competitiveness of Turkish products compared with those from China and India.

As noted above, average prices for HRC, which serves as raw material for the production of welded pipes, fell by 4% in July to $583/t (on a Turkey FOB basis). One of the factors behind the price decline towards the end of the period was the reduction in EU quotas for imports of Turkish HRC.

It should be recalled that, at the end of June, prices for welded pipes in Turkey intended for construction purposes fell slightly, whilst quotations for oil and gas OCTG pipes in the US stabilised at $2,563/t.