2Q16 OCTG Inventory Survey Reveal: Ready to Roll or Running on Empty?


Photo Courtesy ConocoPhillips Company.

Susan Murphy | Publisher of The OCTG Situation Report

Susan Murphy | Publisher

The checkered flag has been waved, signaling the results of our 2Q16 OCTG inventory yard survey are in. It is here where the rubber meets the road, suggesting descending inventory stocks are paving the way for improvements moving forward. As many of you know we pull out all the stops for our quarterly surveys: tracking demand for OCTG throughout the entire supply chain. To ensure the most accurate results we involve a crew of people who count pipe at truck terminals, mills, processors and inspection yards across the lower 48 every quarter.

Gauging the health of the oil patch is the intent of our industry exclusive inventory survey and the takeaway for Q2 offers some modest encouragement. Turns out the draw down this quarter was very similar to last quarter’s results, coming in just under 3K tons less overall.

Just when we thought it was safe to call a bottom, OCTG pricing remains gridlocked. Once again distributors find themselves competing against a slew of distressed stock as we’ve noted. At the same time, we’ve heard multiple reports of renewed interest from would-be buyers, a decided improvement from all the tire kicking of late. Mill inquiries are picking up for the 3rd quarter, but the acceleration in HRC costs have made it exceedingly difficult for domestic ERW producers to compete with seamless producers and imports alike.

A few potential growth engines remain on the horizon, not the least of which is the 2017 E&P spending outlook that suggests E&Ps are revving up, eager to put the pedal to the metal – if currently stalled oil prices move north of $50 again. The recent news that the U.S. is on track to export more natural gas than it imports for the first time since 1957 might also prove a kick in the ‘gas’ in the days to come.

And then there’s the fact that OCTG months of supply is beginning to shift down M/M. There’s a lot riding on this metric so it’s a welcome break from the negativity that’s fueled the OCTG sector for the past year and a half.

As we race toward the close of the year, the question remains: are we in the home stretch? Despite the pundits, there’s no GPS for times like these. Our advice: buckle up but never curb your enthusiasm for the road ahead.

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 2017 E&P Budgets, Crude Oil Prices, E&P, E&P spending, Energy, ERW Pipe, Inventory, OCTG, OCTG Consumption, OCTG Consumption & Pricing, OCTG domestic shipments, OCTG Exports, OCTG Imports, OCTG inventories, OCTG Inventory Survey, OCTG Mills, OCTG Pricing, OCTG Processors, OCTG Producers, Oil & Gas Industry, Oil & Gas Pricing, Oil Country Tublular Goods, Oil Patch, Oil Services & Equipment, Onshore, Prime Pipe, Q2, Supply Chain, Tubular Goods, upstream OCTG and tagged , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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