US tubing market – Buying activity picking up

Along with the merchant bar market, the US hollow sections market has shown more activity in the past few weeks and is currently stable. The fourth quarter of 2006 thus far has been a bit worrisome for the steel market, but lately some products have been making a slight turn-around. A few weeks ago, the tubing market was still showing signs of weakness. With the residential construction sector as slow as it is and with flat rolled prices dropping, the tubing market had to fight to just be at a neutral standing. Since then, however, demand seems to have picked up, particularly on the West Coast, which seems to be busier than the rest of the country. Overall, tubing demand is not great, but the market is still holding on tight. The non-residential construction market has played a large part in the demand for structural tubes, and thankfully, that sector still seems to be holding up very well despite the winter slowdown. Inventory-reduction mode is coming to an end, and service centers are beginning to think about next year and are looking to replenish their inventories. The tubing market is more active, and bookings for March shipments are taking place. Although service centers are looking to rebuild their inventories, import offers have to be very competitive right now in order to get business in this still somewhat-fragile market. Current import offers from Turkey are still ranging from $33.00 cwt. to $34.50 cwt. ($728 /mt to $761 /mt or $660 /nt to $690 /nt) for FOB, loaded truck, US Gulf Coast ports. Offerings from China have softened slightly, with prices falling $0.25 cwt. since our last report. There had been talk of hot-rolled prices in China rising, but this price increase was not accepted in such a weak market. With the market in general so vulnerable, and China's number one buyer - the United States - experiencing a slow period, Chinese tube makers have been forced to lower their tubing prices some to collect orders. Chinese hollow sections offerings now range from $30.75 cwt. to $32.25 cwt. ($678 /mt to $711 /mt or $615 /nt to $645 /nt) FOB West and Gulf Coast. East coast discharge is approximately $0.50 cwt. ($11 /mt or $10 /nt) higher. Although there is a significant gap between import and domestic prices, there has been no word on domestic mills dropping their hollow section prices again. Current domestic tubing prices still range from $45.00 cwt. to $46.00 cwt. ($992 /mt to $1,014 /mt or $900 /nt to $920 /nt) for A500 grade A and grade B hollow sections up to 6”. Larger and unusual sizes have large extras, some as high as double the base price. However, as expected, there are aggressive Mexican offers available. Mexican flat rolled prices are currently among the lowest in the world. Square and rectangular tubing offers from Mexico have also declined significantly, in some cases competing with Chinese and Turkish offer levels.