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Article Excerpt
DESPITE RECENT MODERATION in crude oil and natural gas prices, sales of energy-related pipe and tube products remain strong. In fact, industry executives report, the large-diameter line pipe market is going gangbusters with lead times extending out at least a year.
Even oil country tubular goods and small-diameter line pipe, which experienced some downward price pressure in 2006, are expected to recover later this year. In the meantime, such softness is being offset by increased demand for higher margin premium products.
"2006 was a great year following a great 2005. It continues to be a wonderful time in the industry," says Kurt Minnich, partner at Spears & Associates, the Tulsa, Okla., publisher of Pipe Logix.
Though demand has plateaued or is flattening for some energy products,"it is a plateau at a good level, in part due to the fact that equipment and personnel needed to ramp up further is somewhat limited now" says Ken Hayes, director of standard line pipe for Red Man Pipe & Supply Co., Tulsa, Okla. "But I remain very bullish about the energy market and energy tubulars."
There is no question that energy prices have come off of their highs, says Hugh Burnstad, steel energy marketing manager at The Timken Co., Canton, Ohio. The big question is if energy prices will continue to decline and how far they need to fall before affecting oil and gas exploration plans.
As of mid-January, the settlement price on the New York Mercantile Exchange for crude oil had fallen to just under $52 a barrel. The settlement price for natural gas had fallen to just under $7 per mcf.
The natural gas number is actually...
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