The relentless string of price increases for US domestic ERW pipe has continued in recent weeks, as producers raise their numbers to accommodate both their rising flat rolled costs and strong demand for their products.
After major increases were pushed through for both April and May, US ERW producers have raised their numbers yet again in June, to the tune of $250 /nt to $300 /nt ($276 /mt to $331 /mt or $12.50 cwt. to $15.00 cwt.) Tex-Tube recently announced a $250 /nt increase for all welded products, effective immediately, while IPSCO raised their ERW numbers $300 /nt effective June 1 - In addition to the $250 /nt price increase the company had announced for shipments as of May 12.
Buyers of ERW standard pipe say that with prices currently ranging from $1,450 /nt to $1,500 /nt ($1,598 /mt to $1,653 /mt or $72.50 cwt. to $75.00 cwt.) ex-mill, with the new increases, domestic ERW A53 BPE prices will be pushed up to approximately $1,750 /nt ($1,929 /mt or $87.50 cwt.) ex-mill, with X42 line pipe being about $100 /nt ($110 /mt or $5.00 cwt.) higher.
With the relative lack of imports in the market, producers and distributors say that they continue to see strong demand for their products, particularly those with energy-related applications. However, even demand for welded standard pipe is strong due to the tight inventories. It may be though that the series of huge price hikes from domestic pipe mills may be coming to an end since the flat rolled price increases seem to be losing steam. Also, if import prices do not move up in line with the domestic prices, the domestic mills may start to lose their market share to the imports again.
For now, import offers are still pretty scarce, and prices continue to move up with the rising flat rolled costs around the world. The most competitive import offers for ERW A53 BPE are coming from India, being sold at a range of approximately $65.50 cwt. to $67.50 cwt. ($1,444 /mt to $1,488 /mt or $1,310 /nt to $1,350 /nt) FOB loaded truck in US Gulf ports. There is also some material coming into the Gulf from the Middle East, Turkey, and Eastern Europe at slightly higher than that range. There is some material from Taiwan and South Korea arriving at the West Coast. Traders and distributors say that customers are happy to snap up whatever offers they can find, especially on the line pipe side.
In import news, it looks like China will remain absent from the market for some time. The US Department of Commerce (DOC) recently announced its antidumping (AD) and countervailing duty (CVD) filings for standard and structural pipe from China and, as expected, the margins were quite high. The AD duties for the pipe in question were set at 69.20 to 85.55 percent, and the CVD duties were as high as 615.92 percent. If the US International Trade Commission (ITC) upholds the DOC's vote when it makes its final injury determination on July 14, these duties will be the highest ever imposed against Chinese steel products in the US. With the Chinese government already imposing a hefty export tax for these pipes, it is almost a sure thing that China will be out of the US ERW standard pipe market for a very long time.
In addition, the ITC also recently released its preliminary findings on welded line pipe imports from China, determining that there is a reasonable indication that the said imports have caused injury, marking another win for the domestic industry to keep unfairly priced Chinese pipe imports out of the US. While China can still export large diameter line pipe and seamless products to the US, there are rumors that the seamless pipe, sold at very reasonable numbers compared to that of other regions, could be slapped with antidumping in the near future as well.
However, while China's place in the US pipe market continues to diminish, the 10 percent export tax on Indian pipe may not prove to be such a hindrance after all; after Indian steel producers agreed with the government to lower their prices, they now feel that they should not have to pay the export tax as well, and there are rumors that these taxes will soon be revoked. Currently the producers are eating the export tax, but the rumor is that an official notification revoking the export tax may come as early as next week. So, as it turns out, India could fulfill China's role in the US pipe market as the low-priced import leader after all. For now, in addition to the export tax, problems in procuring vessels as well as the country's shortage of hot rolled coils continue to limit pipe exports to some degree.
Recently released license data from the US Import Administration show that standard pipe imports are still far below their peak level of 142,600 mt reached in June 2007 and below the 2007 monthly average of 107,100 mt. May 2008 license data show 63,147 mt of standard pipe imports (category includes seamless as well as welded), with a large share of the total coming from Canada, at 28,672 mt. Based on the import licence data, after Canada, the US' largest import standard pipe sources in May were: China, at 6,309 mt; South Korea, at 4,982 mt; Mexico, at 4,412 mt; and India, at 3,742 mt.