Global OCTG/Linepipe market opportunities

Tube & Pipe Group

Roman Filimonov

Metal Bulletin Research Tube & Pipe Group

AMM/MBR 10th Steel Tube & Pipe Conference, Houston, Texas

9 March 2017

Global OCTG/Linepipe opportunities for US producers

Tube & Pipe Group

Contents

MBR’s tube and pipe group

Global OCTG market opportunities

Global linepipe market opportunities

Q&A

Tube & Pipe Group

Contents


Global OCTG opportunities

Global linepipe opportunities

Q&A

Tube & Pipe Group

Americas:

Kim Leppold

[email protected]

Tel: + 610 404 0801

Europe/MENA/Asia:

James Ley

[email protected]

Tel: + 44 207 779 8521

CIS/MENA/Asia:

Roman Filimonov

[email protected]

Tel: + 44 207 827 6422

Eastern Europe/Middle East:

(based in Istanbul)

Marina Vertemberg Bozkurt

[email protected]

Tel: + 90 539 595 10 57

China:

(based in Shanghai)

Ginger Ding

[email protected]

Tel: + 86 21 5877 0857* 35

A global research & analysis team based in America, Europe, Asia and

the Middle East…

MBR TUBE AND PIPE GROUP

mailto:[email protected]





Tube & Pipe Group

The tube team sits in the wider Metal Bulletin Research steel team

producing a range of monthly and annual reports on the industry

“I have read your trackers, this is really good stuff.” - Industry association

“I totally love these publications. Good job! Very good luck and I can't

wait for the next issues.” - Leading trading company


Monthly

reports

Special

reports with

online

databases &

consultancy

Tube & Pipe Group

MBR has brought it’s successful 5-year outlook reports for

OCTG and LDP into an online annual service allowing a

more detailed market coverage for the client

Launched at this event! Launched October 2016

Online website platform,

sitting alongside detailed

report, providing quarterly

updates to supply/demand

forecasts for the global

markets

Active following of all major

large-diameter linepipe

projects and OCTG contracts

in the global markets

Long-term market and price

forecasting to 2022

Demo’s of both data platforms

are available next door!


Tube & Pipe Group

Contents


Global OCTG market opportunities


Q&A

Tube & Pipe Group

OCTG apparent consumption index by region (2013 = 100)

40

50

60

70

80

90

100

110

120

2013 2014 2015 2016E 2017F

North America Middle East Europe South America

Africa Other Asia China CIS

Source: MBR’s OCTG Intelligence Service

GLOBAL OCTG MARKET OPPORTUNITIES

Forecast

CIS best performer down just

12% from 2013

North American down nearly

60% from 2013

Gradual recovery

into 2017

OCTG demand fell in all regions in 2016, but North America saw by far the sharpest drops, which will have put more risk on producers just focused on this market

Tube & Pipe Group

Despite the rapid slowdown, North America was still the largest OCTG market

in 2016, but its global share has gone down 6% from 2013 while China and CIS

increased their shares by 3% and 4% accordingly


38%

23%

14%

9%

6%

6%3%1%

32%

26%

18%

8%

5%

5%4%2%

N. America China CIS M. East

Other Asia S. America Africa Europe

2013(18.1 Mt)

2016(10.4 Mt)

Source: MBR’s Global OCTG Market Intelligence Service

All markets outside of Middle

East and Africa are heavily

focused on local producers

dominating in the regional

competition

Some limited opportunities at

these markets may only exist in

narrow niches for specific

applications or products which

are not produced/limited locally

CIS being the 3rd biggest OCTG

market in the world implemented

a number of measures to protect

domestic producers

Tube & Pipe Group

Available markets: Middle East and Africa are largest net

importers outside of N. America

-2000

-1500

-1000

-500

0

500

1000

1500

2000

2500

3000

Net OCTG Imports By Region, kt

2014 2015 2016

Other Asia

Source: MBR’s Global OCTG Market Intelligence Service


North

AmericaMiddle East Africa

CIS South

AmericaEurope China

Middle East/North Africa

historically always second

largest OCTG import market in

world behind North America

Tube & Pipe Group

Middle East OCTG pricing itself, especially for premiums, is picking-up

as the USA is recovering – which would tighten the supply of OCTG

available to the Middle East

Source: MBR


Middle East Imported

1.15Mt of seamless OCTG

in 2014, were still over 1Mt

in 2016

Leading seamless OCTG exporters to the USA/Middle East

Japan

Tube & Pipe Group

In the Middle East, and partially in Africa, drilling activity

remained strong suggesting consistent and strong

underlining “real” OCTG demand

MIDDLE EAST OCTG MARKET OUTLOOK

Source: MBR’s Five Year Outlook OCTG database and Baker Hughes

0

50

100

150

200

250

300

350

400

450

500

Jan

-13

Apr-

13

Jul-

13

Oct-

13

Jan

-14

Apr-

14

Jul-

14

Oct-

14

Jan

-15

Apr-

15

Jul-

15

Oct-

15

Jan

-16

Apr-

16

Jul-

16

Middle East Africa

Rig counts of leading Middle East countries

Real demand in the Middle East

remains strong as drilling for

existing and new projects

continues

While fluctuations in “apparent

consumption” attributed

procurement patterns rather than

real underlying demand

Tube & Pipe Group

Customers: major national (NOC) and international (IOC) oil

& gas companies develop their approaches aiming to

minimize costs including frame agreements and big tenders

GLOBAL OCTG MARKET OPPORTUNITIES: MIDDLE EAST

Tube & Pipe Group

Several major OCTG tenders have been awarded in the Middle East in

2015/6, the challenge is forecasting when the actual tonnages will be

delivered


0 100 200 300 400 500 600

2015

2016

NOC E NOC D NOC C NOC B NOC A

Potential OCTG tenders from GCC NOCs (‘000 tonnes)

1.008Mt

1.08Mt

Most tenders are

for a 2-3 year

drilling program

• One other GCC NOC now about to issue for a 5-year drilling program

Source: MBR

Tube & Pipe Group

Summary of factors affecting OCTG business for N.

American producers in the MENA region


STRENGTH

Stable demand

WEAKNESS

Low prices for commodity

materials

Relatively limited number of

buyers

OPPORTUNITIES

Installing finishing facilities for

better market access

THREATS

Strong competition

Push to local content increase

Tube & Pipe Group

The dynamics of the markets outside North America are

quite different – to start with noticeably by production type

and grade

Seamless85%

ERW15%


Seamless56%

ERW44%

Source: MBR’s OCTG Intelligence Service

NA OCTG demand split by

type in 2016

ROW OCTG demand split by

type in 2016

ERW predominantly used just in outer

casing applications in global markets

– therefore as a US ERW OCTG

producer, most global opportunities

will come in larger OD’s e.g. 13 3/8”

and above

Tube & Pipe Group

SOME OTHER GLOBAL HIGHLIGHTS:

In Europe, offshore North Sea markets have been hit hard by the downturn in the oil price,

especially UKCS – some recovery underway since Q4 as drilling costs have fallen and oil

started to stabilise. In Norway, Statoil drilling at higher levels, but rest of market still

struggling.

MBR remains positive about CIS OCTG market demand in 2017. In Russia restocking by oil

& gas companies is expected to generate a good demand growth at least in the short-term.

New upcoming tendering activity is coming from Turkmenistan and Kazakhstan while some

new offshore drilling is expected in Azerbaijan and wider Caspian in a longer term

In Africa, West African offshore markets, similar to Europe in their nature. Nigeria also

struggling with increased militant action in the Niger Delta. Algeria and Egyptian markets

much stronger – offshore Egypt, current bright spot.

Source: MBR OCTG Intelligence Service

ROW OCTG MARKET OUTLOOK

Tube & Pipe Group

SOME OTHER GLOBAL HIGHLIGHTS (continue):

• In China, for 2017, MBR is forecasting seamless OCTG pipe consumption will expand

moderately, while production may not exceed that of 2016, due to stricter environmental

protection measure and a tougher export environment.

Much of the Other Asian markets is also highly exposed to expensive offshore drilling in the

way Europe, West Africa is. Thailand has been a bright spot for demand in 2016. The

market in general is forecast to see a gradual recovery in 2017. India is expected to generate

some growth

In South America, while Brazil’s offshore drilling costs are lower than most other offshore

regions, the local NOC Petrobras has been dealing with severe debt from several years of

investment in the pre-salt basins as well as corruption scandals and is struggling to boost

output now. As a result, while Brazil’s growth in OCTG demand in 2017 will have a high

CAGR (e.g. 13%) it is starting from a very low base in 2016.

Source: MBR OCTG Intelligence Service

ROW OCTG MARKET OUTLOOK

Tube & Pipe Group

Contents



Global linepipe market opportunities

Q&A

Tube & Pipe Group

The largest consuming market of large-diameter pipe in 2016 was China

at 2.9 Mt followed by the CIS at 2.5 Mt, ME at 3.2 Mt and N. America at 1.3

Mt. The CIS is unique in its dominance of LSAW in the LDP market

Source: MBR Large Diameter Linepipe Intelligence Service

RECENT MARKET HISTORY

0

500

1000

1500

2000

2500

HSAW LSAW

Market split between LSAW and HSAW consumption in each region in 2016 (kt)

Tube & Pipe Group

Global HSAW consumption has declined from 6 Mt to 5.3 Mt (12%)

while only 2 regions demonstrated positive growth

Source: MBR

LARGE DIAMETER LINEPIPE

Change in HSAW linepipe consumption by region from 2015-2016

2015

Cons:6.0 Mt

2016

Cons:5.3 Mt

-40% -20% 0% 20%

Total:

N.America

S.America

Africa

CIS

Other Asia

M.East

Europe

China

Key major consumers

attributable for the overall

negative market change

1

2

3

Tube & Pipe Group

In LSAW the overall global trend was negative as well due to strong

decline in CIS and N.America

Source: MBR


Change in LSAW linepipe consumption by region from 2015-2016

2015

Cons:8.3 Mt

2016

Cons:7.2 Mt

-100% -50% 0% 50% 100% 150%

Total:

S.America

CIS

N.America

M.East

China

Other Asia

Africa

Europe

Key major regions

attributable for the overall

negative market change

1

2

Tube & Pipe Group

Both global HSAW and LSAW markets are expected to re-

bounce in 2017 on the back of growing Chinese demand

0

1000

2000

3000

4000

5000

6000

7000

8000

2016 2017

N.America S.America Europe CIS

M.East Africa China Other Asia


HSAW Market Outlook

0

1000

2000

3000

4000

5000

6000

7000

8000

2016 2017

N.America S.America Europe CIS

M.East Africa China Other Asia

LSAW Market Outlook

Tube & Pipe Group

MBR’s new online services for either the OCTG and LDP markets can be viewed in a demo at this event!

We continue to provide a 350-page

book and pdf

Giving you a detailed 5-year outlook for the

OCTG/LDP market by country and region.

You also get 1 year of access to the OCTG

Database

A Flexible Online Data Platform

Log in to access the latest strategic OCTG data,

updated quarterly, whenever you need it.

Get a global and by-country view

Apparent consumption shipments, trade broken down

by region and country. 37 individual countries

analysed.

Save time

No more re-typing data-sets and manipulating them

yourself.

Easy-to-use

Create charts online and export them and the data

behind them straight into your presentation, report or

model.

Competitor Analysis

A global capacity database allows you to monitor

competitor activity.

Projects Activity

Detailed information on all upcoming linepipe and

OCTG tenders

Updated

Quarterly

To see a free trial of MBR’s online OCTG database, please pope next

door or contact:

[email protected]

Q&A

Tube & Pipe Group

Contents




Q&A

Tube & Pipe Group

Thank you for your time

Date post:	14-Apr-2017
Category:	Presentations & Public Speaking
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Global OCTG/Linepipe market opportunities

Presentations & Public Speaking