Assisted by rising scrap and flat rolled prices, US standard pipe prices are expected to increase over the next week, despite the weak demand and excess position pipe still remaining at Gulf ports.
US pipe mills will likely increase offered prices by a minimum $2.00 cwt. ($44/mt or $40/nt) to take advantage of the coil and scrap price momentum, which will help firm up spot prices; however, these increases will not reflect the current demand. While there is some scattered buying activity for US standard pipe, the overall consumption hasn't changed much, and a large portion of the recent activity has been generated by between the distributors just trying to fill some inventory gaps.
Furthermore, according to the most recent Metals Service Center Institute (MSCI) monthly report, while daily shipments of domestic pipe and tube increased from 8,200 nt in October to 8,400 nt in November, and month-ending inventory decreased from 551,000 nt in October to 523,000 nt in November, the estimated inventory overhang based on current shipping rates actually increased from 3.1 to 3.3 months from October to November respectively. While some buyers will need material in the first quarter, distributors still have plenty of inventory, which will hinder future price increases.
Meanwhile, most offshore standard pipe suppliers are still not finding homes for their material in the US, due to the low demand and excess tonnage at US ports. This excess pipe has been a major roadblock for imports throughout the majority of the year, as tonnage piled up in the first quarter from deals that went awry for one reason or another due to the economic downturn. The excess tonnage has provided a cheaper and quicker alternative for many buyers looking for imported steel. While this excess of inventory has been steadily shrinking, there is still a good amount remaining. However, traders have informed SteelOrbis that activity has begun to pick up recently, as import lead times are now entering the second quarter.
Offshore sources are also coming out with price increases. In fact, most import standard pipe offers are currently on hold, due to foreign suppliers establishing new prices, mostly resulting from their own domestic scrap and coil upticks. Import increases will likely be similar to those established by US domestic mills.
In the meantime, Korean ERW (electric resistance weld) BPE (black plain end) Grade A standard pipe offers from Korea, have increased approximately $0.50 cwt. ($11/mt or $10/nt) since our last report two weeks ago and may currently be found for around $37.00 cwt. to $38.00 cwt. ($816/mt to $838/mt or $740 /nt to $760 /nt) duty-paid, FOB loaded truck in US Gulf ports. However, it may be difficult to find any Korean offers right now as mills are preparing to announce a price increase over the next few days. The same may be said for offers from United Arab Emirates and Turkey, which were last seen are at approximately $38.00 cwt. to $39.00 cwt. ($838/mt to $860/mt or $760/nt to $780/nt) duty-paid, FOB loaded truck in US Gulf ports, but are expected to be in a higher range within the next couple days.
Meanwhile, Indian ERW ASTM A53 galvanized plain end (GPE) standard pipe offers have increased by about $1.50 cwt ($33/mt or $30/nt) from two weeks ago, and can now mostly be found for around $44.00 cwt. to $45.00 cwt. ($970/mt to $992/mt or $880/nt to $900/nt) duty-paid, FOB loaded truck in US Gulf ports. Indian mills have not demonstrated much desire to chase after US orders recently, and could raise prices even higher over the next two weeks, especially if no other GPE competition to the US emerges.