Anybody in the OCTG business knows it’s a volatile sector, thanks to the current market dynamics:
- The American rig count is 226 rigs off the high of a year ago, down to 1,800 land rigs running in the USA. That’s a drop of more than 11 percent.
- The Canadian rig count is 93 rigs down from a year ago, a drop of more than 19 percent.
- Import OCTG is up 30% to 2.9 million tons through September 2012. Imports represent just more than 50 percent of the year-to-date supply in the USA.
- The industry has added more than 430,000 tons to total inventory in the USA, as producer and import shipments have continued to outpace demand.
- Months-on-hand inventory is currently trending at more than five months’ supply.
If you’re in the OCTG business, this snapshot might make you wince a little. But you also know this is just part of the oil and gas business cycle. The market looks to be in a down part of the cycle, but we know this too shall pass. And JMC Steel will not falter in our drive to establish Energex Tube!
Energex Tube is continuing to position itself to be a strong, consistent supplier in the OCTG and line pipe sectors of the oil and gas drilling markets. We are continuously making improvements in our operations in Welland, Ontario; Thomasville, Alabama; and Warren, Ohio. Our objective to push all three of these facilities to greater efficiency and productivity serves us in both tough and good market conditions.
Imports continue to surge in the OCTG and line pipe sectors, nearing the volume levels of the Chinese imports prior to trade actions. At Energex, we understand the need to build a model to compete with fairly traded imports and will continue to strive to do so. However, we also ask our consumers and distributors to look at the true cost of using import product and how it impacts our domestic economy. Fairly traded products of high quality have a place in the North American energy tubulars market. Remember why we strive for energy independence when you make
the decision to buy your energy tubular products.
We have a lot of moving parts within the Energex Tube organization today, but they are all heading in the same direction to make Energex a long-term supplier in the OCTG business. This process will have some bumps in the road. Nevertheless, we will do our very best to continue to communicate clearly with our customer base, as they’re the reason we’re in the business. Furthermore, as our capabilities continue to develop, I will discuss how we think we can provide a new level of customer service in the OCTG and line pipe sectors.
The energy pipe market will have highs and lows, but Energex will endure, and we’ll keep our focus on providing high-quality product and first-class customer service.