US tubing mills’ efforts in the last couple weeks to prevent a price slide have proven futile, as HSS spot prices are dropping.
The outbreak of tornados that hit the US Southeast in late April—particularly Alabama and Mississippi—slowed steelmaking and buying activity, and even halted production at Independence Tube’s Decatur, Alabama mill, which is still mostly out of commission for the time being. But even with reduced domestic production, availability is plentiful across the US, as order entry rates are scant.
The weather situation curbed major HSS price declines in April and early May, but with US domestic hot rolled coil (HRC) spot prices now $37.00-$39.00 cwt. ($816-$860/mt or $740-$780/nt) ex-Midwest mill—down about $6.00 cwt. ($132/mt or $120/nt) since early April—hollow structural sections (HSS) prices are quickly falling. US domestic HSS spot prices are now $56.00-$57.00 cwt. ($1,235-$1,257/mt or $1,120-$1,140/nt) ex-Midwest mill, reflecting a $1.00 cwt. ($22/mt or $20/nt) decrease on the low end, and a $2.00 cwt. ($44/mt or $40/nt) decline on the high end since our last report two weeks ago.
West Coast HSS spot prices have dropped since early May as well, softening $1.00 cwt. to $57.00-$58.00 cwt. ($1,257-$1,279/mt or $1,140-$1,160/nt) ex-mill. HSS spot prices from both Midwest and West Coast mills are poised to continue falling throughout Q2, and so buyers are delaying placing orders, stretching current inventories for as long as possible. Spot prices are likely drop at least another $2.00-$3.00 cwt. ($44-$66/mt or $20-$40/nt) by the end of Q2, and possibly even more if domestic HRC spot prices decline further.
Expectedly, import activity is still extremely slow; and Turkish mills’ recent increase in HSS offer prices to the US have nearly erased any chance of raising activity levels. Traders point to higher domestic HRC prices in the Turkish market for the $1.00-$2.00 cwt. increase in offer prices to the US. Current offers from Turkey in the range of $49.50-$51.50 cwt. ($1,091-$1,135/mt or $990-$1,030/nt) duty-paid FOB loaded truck in US Gulf ports. However, traders tell SteelOrbis that despite increases in domestic Turkish HRC prices, Turkish mills will likely reduce their offer prices to the US in the next week in an attempt to gain a few orders.