What a year the last couple weeks have been! Our exclusive 1Q20 OCTG Inventory Quarterly Report was completed while we hunkered in the bunker as so many of our readers are now doing. Our hearts go out to all of those personally impacted by COVID-19 and those that are simply struggling with the everyday challenges of the current crisis.
Considering the difficulties consuming the oil patch these days you could consider this your stimulus check-in as we’re grateful to be the bearers of a bit of encouraging news. With imported tubulars decelerating and mill/processors rushing to expedite orders and deliveries, Q1 OCTG inventories were held in check. The ensuing inventory trough puts supply side players in the best position possible to brave the many challenges that 2020 is presenting.
Our yard survey of the US supply chain revealed that “prime” OCTG inventories in the L48 contracted considerably in the most recent quarter (period ending 3/31/20). This sum is especially significant in that it is the lowest inventory total on record since Q2 of 2010. The largest decrease in 1Q20 inventories was shared by mill/processors. Our separate survey of “select” distributors demonstrated a general predisposition to curbing inventories as well.
Drawdowns were recorded in every category throughout the tri-state (TX, OK, LA) in Q1. Products experiencing greater levels of outbound shipments versus inbound activity were welded and carbon OCTG stocks; two categories that were impacted by lower imported shipments in the first quarter. Both played prominent roles in the shedding of tons this past quarter. In the closely monitored tubing category (SMLS & ERW), an impressive reduction was registered this past quarter, too.
The objective of our quarterly inventory surveys is to shine a light on the health of the oil patch or—with apologies to Kenny Rogers & The First Edition: to see what condition the condition is in. With our Q1 inventory stats soundly in place we also revisited our 2020 OCTG forecasts and opined on the days ahead. Our April 2020 market intel offers a deep dive into all the metrics that matter in our most recent OCTG inventory yard survey as well as how the changes are expected to impact the oilfield in the days ahead.
We wish our updated forecasts could offer solace but we owe our candor to our subscribers so they can plan accordingly. In wrapping our monthly market intel, we leave you with a compelling thought from the legendary NCAA basketball head coach John Wooden who encouraged his players by saying, “Don’t let what you cannot do interfere with what you can do.”
NOTE: Our monthly blog posts offer a slice of the content we publish in The OCTG Situation Report every month. To request a complimentary copy of our Report for review please visit: https://www.octgsituationreport.com/subscribe
Photo Courtesy Texas Steel Conversion Inc.