Summary
• Tariffs to increase costs for oilfield services companies
• OCTG imports from Canada, Mexico rise amid tariff concerns
• Smaller producers face higher costs due to tariff impact
March 11 (Reuters) – The proposed U.S. tariffs on steel and aluminum imports are poised to escalate costs for U.S. oilfield services companies, which rely on these metals for their operations.
Oilfield services firms such as ChampionX and Patterson-UTI are the backbone of the North American oil and gas industry, supplying essential equipment and services for drilling, production and maintenance. The lifeblood of this sector – drilling rigs, pipelines, refineries, compressors, storage tanks and offshore platforms – is steel.
U.S. President Donald Trump earlier on Tuesday doubled the planned tariffs on Canadian steel and aluminum imports to 50%, to go into effect on Wednesday morning.
Any tariff hike is a potential hit to the operational and production costs of these businesses, half a dozen industry experts told Reuters.
“About 14% of what we buy, it comes from countries that will be impacted by tariffs,” said Patterson-UTI CEO Andy Hendricks. “If you layer on tariffs, it could affect us in the low single digits in terms of our costs going up for what we do,”
Peer ChampionX has also warned of equipment costs going up due to tariffs.
A particular variety of steel, hot-rolled coil steel (HRC), is used to fashion oil country tubular goods (OCTG) – specialized pipes and tubes designed to endure high pressures, temperatures and corrosive environments.
In 2024, the U.S. imported nearly 40% of its OCTG, according to Wood Mackenzie analyst Nathan Nemeth. By January 2025, Canada and Mexico accounted for 16% of OCTG imports, hinting at buyers stockpiling ahead of potential tariffs.
Broadly, U.S. imports of steel products from Canada and Mexico rose in January more than 32% from the previous month, to 1,017,644 metric tons, U.S. Census Bureau data showed.
Rystad Energy forecasts tariffs to spike OCTG costs by 15% year-on-year. U.S. prices of HRC are estimated to ascend to $890 per short ton in 2025, marking a 15% increase from the previous year’s average price, according to S&P Global Commodity Insights analyst Ali Oktay.
“It’s probably going to be harder for service companies in 2025 to maintain their activity levels and their pricing,” said Mark Chapman, principal analyst for OFS Intelligence at Enverus.
Shares of Patterson-UTI have fallen about 16.5% while ChampionX has dropped 3.3% since February 11, when Trump announced plans to hike duties on steel and metal imports.
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