The US domestic tubing market seems to be showing signs of improvement, as prices have risen slightly and import competition has fallen off.
The domestic tubing market in the US has had a rough year compared with recent years. The steel market in general slowed down in 2007, and tubing was no exception. Residential construction projects have been sluggish and are expected to remain that way for some time. However, the non-residential and industrial construction markets, though weaker now than in the beginning of the year, remained decent this year, generating some demand for tubing. These large projects need hollow structural sections, so the market for larger sizes is steadier than that for mechanical tubing.
Improvement in demand, if at all, is slight at the moment. However, the weak import competition and the recent price increase is boosting morale. Buyers have accepted the flat rolled price increase for October shipments, despite the fact that the increase was highly criticized when originally announced. The flat rolled market has been soft for some time, and although there is not a huge recovery in sight, things are picking up, and a $20 /nt ($1.00 cwt. or $22 /mt) price increase did go though. This pushed tubing producers to up tubing prices by approximately $1.50 cwt. ($33 /mt or $30 /nt) in recent weeks, and so far the increase has not been rescinded.
Current domestic hollow section prices now range from $39.50 cwt. to $40.50 cwt. ($871 /mt to $893 /mt or $790 /nt to $810 /nt) for A500 grade A and grade B hollow sections up to 6" in the Midwest regions.
With the lack of imports coming in, the pricing trend for domestic tubing is slightly up for the time being. Also, flat rolled prices are expected to see some small increases in the months ahead, which tubing producers may pass on to their customers. Along with raw material cost increases, import competition is minimal, which will trigger a stronger need for domestic products, thereby improving market conditions.
Concerns over Chinese tubing quality issues remain. Virtually every trader that bought from China is having problems with the tubing not meeting the standards for ASTM A500 Grade B. Naturally, service centers are not buying Chinese material as there have been too many red flags over the past month. Some domestic pipe and tube producers are trying to bring the issue further into the public domain.
Because of the pending issue, Chinese mills are reluctant to offer to the US. Moreover, Chinese tube prices have increased further due to higher raw material costs. Offering prices are up $1.00 cwt. since our last report and are now ranging from $36.00 cwt. to $37.00 cwt. ($794 /mt to $816 /mt or $720 /nt to $740 /nt) FOB West Coast, and 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 are not finding many takers either, as prices are very close to the domestic price. With freight rates on the rise, Turkish offers to the US have increased, this time by $1.00 cwt. Freight rates to the US from Turkey are now estimated at $110 /mt for small quantities of products, up approximately $30 /mt from a few months ago. This has naturally pushed traders' prices up, and offering prices from Turkey to US buyers are now ranging from $38.00 cwt. to $39.50 cwt. ($838 /mt to $871 /mt or $760 /nt to $790 /nt) FOB, loaded-truck, US Gulf Coast ports.
Data from the US Import Administration show that, for structural pipe and tube, worldwide exports to the US during the three-month span of July, August, and September totaled 163,904 mt. The top three exporters to the US during the same time frame were: Canada at 70,937 mt, China at 55,938 mt, and South Korea at 13,197 mt. For the same three-month span, worldwide exports to the US for mechanical tubing totaled 155,911 mt. The top three exporters of mechanical tube to the US were: China at 47,227 mt, Mexico at 42,601 mt, and Canada at 22,398 mt.