American ‘Idle’: OCTG and The Sound of Silence

Photo Courtesy Claire Cutshaw

Photo Courtesy Claire Cutshaw

Susan Murphy | Publisher

Susan Murphy | Publisher

Judging by the unsettling sound of silence that has come over the oil patch one might suspect the stage is being set for a new reality show: American ‘Idle.’ The fever pitch that defined the state of the energy industry for the past five years has hit a sour note and producers working in shale; the “rock” star of our nation’s energy revolution, are singing the blues.

While we’re doing our best to remain upbeat, some things simply can’t be sugarcoated. As we go to press, the situation plaguing hydrocarbon pricing gives new meaning to the word turm-oil. We don’t mean to sound like a broken record but the same threats that we’ve previously reported remain concerns today.

This month saw distributor OCTG prices in a funk as inventories continued to swell. Competition for the dwindling demand is heating up and OCTG imports wasted no time making their presence known, dropping a half million tons of pipe on our doorstep in January. That tonnage marked the highest level of imports since November of 2008 and the second-highest count of all time, including a record-breaking volume of ERW. Imports have eased some in February but the tonnages are still disconcerting especially given the current market volatility. Domestic pipe producers are managing expectations, shrewdly scaling back production in most cases and grateful for some relief in the cost of raw materials in others. Then there’s the recent spate of announcements regarding the idling of various tubular facilities and new capacity that has been postponed indefinitely.

This month in our Report we replaced our 2015 U.S. OCTG Capacity Additions pie chart with our 2015 U.S. Supply Forecast pie chart since the crude oil price collapse all but rendered our original forecast (November 2014) moot. We expect another update will be inevitable as the market continues its re-balancing act. When supply is considered in light of the tons of OCTG consumption we’re forecasting for 2015, the prognosis becomes glut-wrenching.

Granted, oil veterans are well acquainted with boom-and-bust cycles but that doesn’t make it any easier. No matter what the narrative, we always strive to wrap the month on an encouraging note. And thus we part with a quote from the founder of Standard Oil Company, John D. Rockefeller who, in an attempt to fend off a chorus of doomsayers, succeeded by focusing his energy on what could be done declaring, “I always try to turn every disaster into an opportunity.”

Photo Courtesy Claire Cutshaw

About The OCTG Situation Report

Susan Murphy is the Publisher + Editor in Chief of The OCTG Situation Report, a leading authority focused on the North American Oil Country Tubular Goods market. Susan has worked alongside the founder of The OCTG Situation Report, Duane Murphy (and yes, there is a family connection!) for the past decade assisting in various aspects of producing the monthly publication and special projects including market research and development. It had long been suspected that Susan carried the 'OCTGene,' a fact that was confirmed when she took the reins in 2012. A native of Michigan and now practicing cowgirl, Susan employs her education from both the University of Michigan and Michigan State University bringing her expertise in the areas of research, marketing, branding and creative and technical writing to The Report. She has also enjoyed a successful business career as a lauded entrepreneur, running her own brand/marketing and advertising/design firms.
This entry was posted in Crude Oil Prices, Energy, OCTG, OCTG Pricing, Oil & Gas Industry, Oil Country Tublular Goods, Oil Patch, Oil Prices, Prime Pipe, Shale Plays, steel industry, Tubular Goods and tagged , , , , , , , , , , . Bookmark the permalink.

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