DEMAND FOR OCTG INCREASING, DRIVING UP PRICES

Increasing energy demand and a surge in North Sea exploration activity has increased the appetite for OCTG in the North Sea market, particularly in Norway, after a slowdown during the pandemic.

The carbon OCTG and 13Cr OCTG markets are absorbing excess inventories and restocking for upcoming North Sea operations, a move that is expected to drive up both prices and consumption of OCTG.

Some projects may struggle to be furnished during the peak drilling window this summer amid current long lead times from mills and depleted inventories that are not being restocked at pre-pandemic rates, which may trigger a price spike in the summer months.

High shipping costs will make an additional upward pressure on OCTG prices, particularly coming from Japan.

Higher demand from overseas buyers may also support the uptrend in the OCTG North Sea market.

European suppliers have started to see more inquiries from U.S. customers facing a shortage of casing.

European inventories are now being shipped to the U.S. based on attractive selling prices.

OCTG stocked in the North Sea market is often used for projects in North and West Africa, and stronger demand from that region may compensate the possible reduction in project activity in the UK market.

Overall, scarcity of material and high prices will remain key features of the North Sea market of OCTG.

—Marina Bozkurt, Senior Analyst

Lithium

Lithium producers in China are offering 410,000-415,000 yuan per ton for lithium carbonate, while traders have been offering more aggressively at about 430,000-440,000 yuan per ton, strengthening the bullish sentiment in the market.

The price of lithium has been firm at the back of consumers’ restocking appetites so far this week.

The tight spot supply has limited consumers’ ability to negotiate prices, with big cathode producers in China only able to negotiate prices down by 1,000-2,000 yuan per ton for lithium carbonate.

Cobalt

It is estimated that the year-on-year increase in production of refined cobalt in China was 40% while China’s imports of cobalt hydroxide was only marginally up by 2.77% in 2021 from 2020 levels. 

The price for cobalt sulfate, the raw material to produce NCM batteries, remained steady this week at around 110,000 yuan per ton. Some producers are reluctant to make big sales in light of tight availability of cobalt hydroxide, the major feedstock for cobalt refining.

The deliveries of cobalt hydroxide in China are estimated to drop in January and February, impacted by the slow efficiency of logistics and customs clearance during the holiday season.