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'Strong through year's end': producers and distributors of pipe and tube products are enjoying a very prosperous 2006, and hoping for more of the same next year.

Article Excerpt
MILL AND SERVICE CENTER executives report that the pipe and tube market remains fairly strong--especially for energy-related applications--and should remain so at least through year's end. Various factors--including imports and a slowing economy--could dampen growth in certain tubular sectors next year, however.

"Demand is not bad, generally speaking," says Bill Wolfe, executive director of the Steel Tube Institute of North America in Washington, D.C. "There is a lot of foreign penetration of standard pipe and some issues regarding imported parts using tubing from China, but basically it isn't a bad year."

Others are more glowing in their assessment of the market. "Demand has been excellent all year," says Warren Mackenzie, vice president of sales and marketing for PTC Alliance in Pittsburgh, a producer of drawn over mandrel (DOM) and electric resistance welding (ERW) tubing. "There are all indications that demand will remain strong at least through the balance of this year."

Likewise, Rene J. Robichaud, president and chief executive officer of NS Group Inc., Newport, Ky., an oil country tubular goods (OCTG) and small-diameter line pipe producer, calls it "an outstanding market, better than we've seen for years."

Demand for OCTG has been particularly strong for several years now, says Doug Yadon, publisher of the Preston Pipe Report, Kehmah, Texas, with the number of U.S. rigs drilling for oil and natural gas on the increase. According to Baker Hughes Inc., Houston, 1,762 drill rigs were running in the United States as of Aug. 18, up 23 percent from a year earlier.

"People are drilling at a rate we haven't seen in 20 years," Robichaud says. This, of course, is being driven by high energy prices, including oil at over $70 a barrel and, perhaps more importantly, natural gas at just under $7 per MMBtu. While down considerably from post-Katrina highs, the price of natural gas is still very pricey by historical standards. Over 80 percent of the rigs in the United States drill for natural gas, Robichaud points out, adding that there is still a need to increase natural gas drilling. Over the past few decades, the large "pools" of natural gas reserves have largely dried up, leaving exploration companies to search for more "little puddles" of gas.

"With natural gas prices up, more people are willing to find more puddles that might not have been cost effective to drill at lower prices," he observes.

To do so, they are using not only more...

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