The OCTG ‘Space’ 1Q19: The Current Frontier

Photo Courtesy CTAP, LLC - The OCTG Situation Report April 2019

Photo Courtesy CTAP, LLC

Susan Murphy | The OCTG Situation Report

Susan Murphy | Publisher + Editor-in-Chief

While visual evidence of a massive Black Hole made headlines recently, we’re happy to report you won’t find any black holes in OCTG inventory metrics due to our exclusive quarterly Inventory Yard Surveys. This breakthrough is credited to our publication’s founder, Duane Murphy, who decided 33 years ago it was high time to resolve this gap and went about the laborious task of doing exactly that. The gravity of his work cannot be underestimated especially when you consider our inventory results are not the product of guesstimates like all others. To that end our computer model cranks out data points collected from over a hundred pipe yards throughout the supply chain that help us provide accurate and essential insight into the metrics that matter.

Our 1Q19 yard probe of the US supply chain revealed that “prime” OCTG inventories in the lower 48 expanded in the period ending 3/31/19. The bulk of increases were reported in the mill/processor segment; concentrated mainly in the processor category. Much of what we witnessed with regard to the increases can be ascribed to the reset in import quotas, not to mention the decline in WTI crude prices that surprised to the downside in 4Q18 about the time 2019 budgets were being considered. Reasonable hikes, by most measures, were recorded in all but two categories throughout the tri-state (TX, OK, LA). No surprise many processors cited a pickup in inbound activity; much of it imported goods. Greater detail and analysis on our recent survey and other contiguous data points can be found in this month’s Report.

What do mounting inventories signal and what do they mean for key oil patch metrics like consumption and months of supply? More often than not inventory builds are unwelcome, which is why suppliers do what they can to keep them in check. Increases in inventory can be interpreted as a signal of weaker than anticipated demand (the bad) or demand that is expected to grow in the future (the good). May sound basic but there’s more. In addition to examining the raw size of product inventories, studying trends in months of supply (trickles down from inventory) offers clues to the health of the market at any given time. This metric illustrates how many months it would take for the current inventory of OCTG on the market to sell given the pace of sales. It also plays into whom the market favors. Lower inventory levels are more favorable to sellers and prices while higher inventories typically favor buyers looking for better deals. Thus, an understanding of inventory levels not only provides insight into product tightness and surpluses it is also indispensable to knowing when to time buys. 

So where is the market today and how does it bode for Q2 and beyond? Current inventory months of supply is slightly leveraged toward buyers. This metric has edged up over the past quarter but still remains in a relatively comfortable place provided the market doesn’t sour in Q2. Consumption for Q1, while hardly ‘over a barrel,’ did succumb to the downward forces on WTI in 4Q18. Imported shipments burst out of the gate in January and have vacillated ever since but are expected to strengthen as we move farther away from the crude price sucker punch in Q4. Many domestic mills, buoyed by an absence of raw material cost constraints, are reporting steady but plodding sales this quarter in anticipation of improving crude prices. This combination suggests another quarter of inventory expansion ahead, an event that shouldn’t be problematic provided consumption moves in lockstep. And although there is plenty of market skepticism in the oil patch segueing from Q2 to 2H we believe the integrated Permian oil “majors” hold the keys to OCTG consumption this year. 

Even with a more bullish outlook, there remains one nagging marplot and that is tubing. While it may sound like old news and hyperbole considering spot market prices for the category have been getting hammered, we still caution buyers of the potential to be sidelined if tubing supplies dwindle in the latter part of the year when completions activity reaches a zenith. With the analysis provided in our April market intel you’ll understand that it doesn’t take a rocket scientist to predict what might lie ahead. 

If the stars are in alignment 2H19 is likely to be “one small step” for OCTG consumption. While it’s not a giant leap, it’s not a mission impossible either. 

Photo Courtesy CTAP, LLC

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Notice of Press Conferences to be held in lead-up to Shareholders Meeting

Dear members of the media and representatives of investment and finance companies,

We are pleased to invite you to the traditional Press Conferences of Gazprom's top management to be held in the lead-up to the Company's annual General Shareholders Meeting.

The Press Conferences will take place from May 14 through June 20 at the TASS Press Center in St. Petersburg at the following address: 37A Shpalernaya St.

You can also take part in the Press Conferences via video calls from the TASS Press Center in Moscow at the following address: 2 Tverskoy Blvd.

Admittance to the TASS buildings in St. Petersburg and Moscow will be granted in accordance with accreditation lists. All visitors must carry passports and press passes.

May 14 (02:30 pm, Moscow time)

Mineral and Raw Material Base Development. Gas Production. Gas Transmission System Development

Participants:

  • Vitaly Markelov, Deputy Chairman of the Management Committee, Gazprom;
  • Oleg Aksyutin, Deputy Chairman of the Management Committee, Head of Department, Gazprom;
  • Sergey Menshikov, Member of the Management Committee, Head of Department, Gazprom;
  • Vyacheslav Mikhalenko, Member of the Management Committee, Head of Department, Gazprom;
  • Vasily Petlichenko, Deputy Head of Department, Gazprom.

May 20 (02:30 pm, Moscow time)

Gazprom's Power Generation Strategy

Participant:

  • Denis Fyodorov, Head of Directorate, Gazprom; Director General, Gazprom Energoholding.

May 22 (02:30 pm, Moscow time)

Gas Supply to Domestic Market. Executing Russian Regions Gasification Program

Participants:

  • Gennady Sukhov, Member of the Management Committee, Head of Department, Gazprom;
  • Sergey Gustov, Director General, Gazprom Mezhregiongaz.

May 28 (02:30 pm, Moscow time)

Gazprom in Eastern Russia, Entry into Asia-Pacific Markets

Participants:

June 18 (02:30 pm, Moscow time)

Gas Export and Enhancing Reliability of Gas Supply to Europe

Participants:

  • Elena Burmistrova, Deputy Chairman of the Management Committee, Gazprom; Director General, Gazprom Export;
  • Sergey Kuznets, Member of the Management Committee, Head of Department, Gazprom;
  • Pavel Oderov, Head of Department, Gazprom.

June 20 (02:30 pm, Moscow time)

Gazprom's Financial and Economic Policy

Participants:

 

To obtain accreditation for journalists, investment companies' representatives, and investment bank analysts, please call:

+7 812 609-34-21 

The Press Conferences will be broadcast online in Russian and English at www.gazpromvideo.ru.

Live audio transmissions will be available in Russian and English at the phone numbers +7 495 719-35-77 and +7 495 719-30-00, respectively (multi-line system).

In addition, visitors of the www.gazpromvideo.ru website will have the opportunity to pose written questions online to the participants of the Press Conferences.



Children of Gazprom Transgaz Nizhny Novgorod employees awarded at national arts festival

On April 21, the 19th Plasticine Crow National Children's Arts Festival concluded in Saransk with a big gala concert. The team of the Torbeyevskoye Gas Pipeline Operation Center, branch of Gazprom Transgaz Nizhny Novgorod, had taken part in the festival.

The final round of the competition included 54 concert numbers by young performers aged between 5 and 15, representing the Republic of Mordovia and such Russian regions as the Moscow, Ryazan, Nizhny Novgorod, Penza and Ulyanovsk regions and the Republic of Chuvashia. The children's talents were assessed by a jury led by Pyotr Sorokin, Merited Artist of Russia, in four categories: Song, Dance, Spoken Word, and Drawing.

Intro, a Vyacheslav Shvetsov-led band representing the club Allegro under the Torbeyevskoye Gas Pipeline Operation Center, took third place in the Song category after performing a composition by Europe. Intro features Alexander Yuganov on vocals, Ksenia Artyukova on drums, Ivan Parfilov and Stepan Shichkin on guitar, and Karina Zmeeva and Tatyana Baysheva on keyboards.

Background

Gazprom Transgaz Nizhny Novgorod is a wholly-owned subsidiary of Gazprom that delivers natural gas to 15 regions in the Volga and Central Federal Districts of the Russian Federation.

The company's gas transmission system is composed of trunklines stretching for over 13,000 kilometers.

Gazprom Transgaz Nizhny Novgorod operates 54 compressor workshops, 284 gas compressor units, 375 gas distribution stations, and 15 CNG filling stations. The company's efficiency is achieved through 25 branches, including 16 gas pipeline operation centers, the Engineering Center, the Emergency Response and Recovery Directorate, the Procurement Directorate, the Utility Vehicles and Special-Purpose Machinery Directorate, the Volgoavtogaz company, and the Staff Training Center.

The ISO 14001:2004 environmental management system is in effect at Gazprom Transgaz Nizhny Novgorod. The company employs around 11,000 people. It is headquartered in Nizhny Novgorod.

 



Employees of Gazprom Transgaz Tchaikovsky take part in Green Spring environmental cleanup

On April 24 and 26, employees of the head office and branches of Gazprom Transgaz Tchaikovsky carried out a number of cleanup actions in Tchaikovsky as part of the Green Spring countrywide environmental cleanup.

The cleanup was kicked off by the employees of the company's culture and sports center. They cleaned Tchaikovsky Square, Sportivnaya Street, and the areas adjacent to the Zolotoy Shar and Olimp corporate sports facilities.

On April 26, employees of the corporate security service removed debris and dead wood from the area near Kindergarten No. 27. They were assisted by the representatives of the Tchaikovsky security unit under the Volga Interregional Security Directorate of Gazprom.

On the same day, employees from the administration of Gazprom Transgaz Tchaikovsky cleaned Primorsky Boulevard, home to the company's head office. Just across the street, their fellow gas workers tidied up the Walkway of Pioneer Builders and Creators of Tchaikovsky. They removed litter, washed the pavement, and painted benches and trash bins.

A total of 442 employees of Gazprom Transgaz Tchaikovsky were involved in the cleaning and improvement of municipal areas during the last ten days of April. The event was part of the 6th Green Spring countrywide environmental cleanup organized by the Vernadsky Ecological Foundation in cooperation with the All-Russian Society for Nature Protection. The volunteers collected 23 tons of trash in an area covering over 40 hectares.

Background

Gazprom Transgaz Tchaikovsky is a wholly-owned subsidiary of Gazprom. The company is focused on natural gas transmission to consumers in the Perm Territory, the Republic of Udmurtia, the Kirov Region and the Republic of Tatarstan, as well as on gas transit via 15 gas trunklines to the central regions of the Russian Federation and abroad. The company maintains over 10,500 kilometers of gas trunklines carrying more than 270 billion cubic meters of gas.

Gazprom Transgaz Tchaikovsky comprises 18 branches, including 12 gas pipeline operation centers, 15 compressor stations, 251 gas compressor units, and 7 CNG filling stations. It has 123 operational gas distribution stations.

The ISO 14001:2015 environmental management system and the ISO 50001:2011 energy management system are in place at Gazprom Transgaz Tchaikovsky as part of its environmental policy. The company employs upward of 8,500 people and is headquartered in Tchaikovsky.