US pipe and tube industry expects pickup in 2025

Tubular goods producers and distributors expect headwinds in the oil and gas industry for the rest of the year, with activity expected to pick up in 2025.

The companies, which sell a mix of oil country tubular goods (OCTG) and line pipe, tempered expectations for the rest of 2024 as oilfield consolidations and slowing drilling activity weigh on the market.

Pipe producer Tenaris expects its sales volumes to fall by 10-15pc in the second half of the year from the first half. If realized, second-half shipments would drop by 157,000-208,000 metric tonnes (t) (173,100-229,300 short tons) to 1.77-1.87mn t from the first half. The second-half estimate would be 49,000-149,000t lower than the 1.92mn t sold in the second half of 2023.

The Argus US OCTG all-items index for July was flat from the prior month on changes in price inputs. The July index was down by 3pc from June when compared to like price inputs.

French-based global tubular producer Vallourec said it expects US shipments to weaken through the rest of the year. Chief executive Philippe Guillemot said forecasters expect US oil production to slow because of the low level of active drilling rigs.

The number of active oil and gas drilling rigs was 588 for the week ending 9 August, down by 66 from the year prior, according to oilfield service company Baker Hughes.

Pipe and tubular distributors MRC Global and DNOW both see any increases in activity pushing out into 2025.

MRC pointed to gas utility destocking and project delays pushing business into next year.

Weaker gas prices coupled with lower oil and gas budgets and tentative spending before the November US presidential election will slow third quarter US activity, sequentially, DNOW's chief executive David Cherechinsky said.

"The current expectations are that [completions and rig counts] may bottom in the second half of the year or early in 2025," Cherechinsky said on a 7 August earnings call.

By Rye Druzin