U-O Line Pipe Demand to Recover in 2H of F2009

Supply and demand balance is expected to tighten for Japanese large diameter U-O line pipe in the second half of fiscal 2009 (Sep09-Mar10). Several natural gas pipe line projects are canceled due to financial crisis. However, the large project in Australia or Papua New Guinea is likely to be ordered in 2H of F2009 when the project is expected to start a bid in 1H.

Gas pipe lines are being constructed worldwide with demand growth for natural gas. But gas price dropped along oil price plunge to US$ 40-45 per barrel from the high of US$ 147 after November 2008.

Oil companies cancelled some projects or postponed the bid starts because gas and steel prices are decreasing. PTT Public Company’s natural gas pipe line construction project was held off in Thailand when gas demand for industrial use decreased.

Many gas line pipe projects, those which were held off, may start in 2H of F2009. Natural gas project by Chevron Corporation in Australia is expected to adopt large diameter U-O pipe at around 150,000 tonnes. The project by Exxon Mobile in Papua New Guinea will adopt U-O pipe at around 310,000 tonnes.

Steel demand dropped rapidly for automobile, construction machinery or shipbuilding. Plate supply is loosing. Japanese integrated steel makers anticipate for demand increase for U-O pipe.