Slow sales activity and too much inventory are two phrases market sources have been repeating to SteelOrbis in recent weeks in regard to the hollow sections market in the US.
Hollow sections production is currently exceeding consumption. One West Coast service center commented that tubing is readily available; on the floor at the mill. The market is in a soft spot and so far there are not any signs of recovery. Demand has been slipping, especially for mechanical tubing, as the housing market continues its slump. Larger sizes are stronger, but demand still isn't that great.
Something else to consider is raw material costs. Scrap prices have been more or less sideways for a couple of months and the market in general is pretty flat. Domestic flat rolled prices have been trending downwards for some time now with prices in the $25.00 cwt. range. This, combined with the struggling demand on the tubing side, has caused market players to suspect tubing prices will be falling shortly as well.
Currently hollow section prices are still in the same range as reported two weeks ago by SteelOrbis; however prices are expected to slip making the domestic pricing trend go down. Prices still range from $40.00 cwt. to $42.00 cwt. ($882 /mt to $926 /mt or $800 /nt to $840 /nt) for A500 grade A and grade B hollow sections up to 6" in the Midwest region.
Although there was not an official price decrease announced across the line, larger companies or companies with large orders are being offered lower numbers. It's been heard that domestic producers are lowering prices strategically to show damage for their antidumping case against China, South Korea, Turkey and Mexico.
Due to the antidumping petition filed by US producers against China, light walled tubing offers from China have been eliminated for the most part, but structural sizes are still being offered to the US. The VAT rebate reduction has pushed import prices up another $1.00 cwt. since our last report two weeks ago.
Current hollow section offering prices from China now range from $34.50 cwt. to $36.00 cwt. ($761 /mt to $794 /mt or $690 /nt to $720 /nt) FOB West Coast, approximately $0.50 cwt. ($11 /mt or $10 /nt) higher on the Gulf Coast. East Coast discharge is roughly another $0.50 cwt. ($11 /mt or $10 nt) higher than on the Gulf Coast.
Turkish offers to the US are still on the high side with little to no takers. The flat rolled market in this region is still soft, making raw material prices slightly lower; however, freight rates have increased, offsetting the lower priced flat rolled costs, keeping offering prices stable from our report of two weeks ago.
Import offers from Turkey are still in the range of $36.50 cwt. to $38.00 cwt. ($805 /mt to $838 /mt or $730 /nt to $760 /nt) FOB, loaded-truck, US Gulf Coast ports.