US domestic HSS buyers are feeling a bit shafted by the recent $40/nt price increase announcement put out by US Midwest tubing mills, stating that the tubing mills claiming that their costs are going up equates to little more than "crying wolf".
"I'm still trying to wrap my head around that rationale," commented one purchasing manager. "They're saying that they need to raise prices because they're paying more for hot rolled coil (HRC), but considering spot prices for HRC are falling again, that explanation doesn't pass the smell test."
Tubing mills, however, point out that not everyone bought coils when the market was at its low point.
According to one Midwest mill, a number of buyers are presuming that tubing mills all bought in early August when HRC was $27.00-$28.00 cwt. ($595-$617/mt or $540-$560/nt). During that time, though, inventories may not have supported making a purchase, and there are other mills that just missed the window. Basically, if a tubing mill didn't place orders for HRC when it was at the bottom, their production cost is legitimately going up.
Midwest mills are looking to book at $44.00-$45.00 cwt. ($970-$992/mt or $880-$900/nt) for orders shipped after September 10, although some buyers are reporting still being able purchase HSS at a significant discount.
Case in point: another buyer's stated "definitive knowledge" of a service center in the Southeast selling HSS at $41.50-$42.00 cwt. ($915-$926/mt or $830-$840/nt). "Orders are still hard to come by and some sellers are willing to do anything to get them," he said.
The average range, though, has held neutral from our last report two weeks ago, with spot pricing for HSS most commonly being reported as being between $42.50-$43.50 cwt. ($937-$959/mt or $850-$870/nt), ex-Midwest mill.
Looking toward the Pacific, West Coast mills, as expected, also rolled out a $40/nt increase for HSS, although transaction pricing has held neutral since our last report and is still being seen in the approximate range of $46.00-$47.00 cwt. ($1,014-$1,036/nt or $920-$940/nt) ex-West Coast; meaning that increase has yet to gain any sort of traction.
For now, though, the forecast for HSS will be neutral to slightly upward, because although buyers are still actively trying to draw a line in the sand, tubing mills are just as equally determined to get prices up.
Shifting focus offshore, overseas offers have once again become quiet, with Turkish sellers not having gained much traction with previous offers of Turkish HSS at $43.00-$44.00 cwt. ($948-$970/mt or $860-$880/nt) FOB Gulf Port. However, with the end of Ramadan fast approaching, it's expected that may change in the next few weeks. Yet again, with the sustained volatility in the US domestic market, traders remain hesitant when it comes to taking the gamble on futures.