Service centers and distributors throughout the US seem to have different opinions on where the domestic tubing market will go from here. Some market players believe the increase in flat rolled prices will help boost tubing prices and general morale in the market, while others feel it will take a lot more than just increased raw material costs to restore the market.
US flat rolled producers announced last week that they will increase prices by $20 /nt to $30 /nt for October shipments. This announcement has some tubing buyers optimistic for the future of the tubing market. They feel that this is a good sign that the steel market in general is picking up and demand may be strengthening. These buyers also believe tubing prices will be increasing within the next month.
Some other tubing buyers feel there has to be a significant shift in demand in order for tubing prices to increase. One buyer commented, "Yes, people are optimistic hearing about the announced fourth quarter price increase for flat rolled, but to be honest I don't think that will be the case. The market isn't strong and just because flat rolled prices are going up doesn't mean tubing prices will follow. They may even go down before they go up." Other distributors agreed that tubing mills will definitely attempt to increase prices due to raw material costs, but do not think the price increase will stick.
Another factor that buyers are taking into consideration when thinking about the future of the domestic hollow sections market is the most recent scare regarding offshore product purchases. Though mainly only Chinese material has had quality issues, some buyers are now showing caution as regards all imports. "The issues with Chinese material have created an atmosphere of uncertainty for foreign material," one distributor commented. Some service centers also mentioned that their fabricators are not accepting any material of Chinese origin from them, even if it has been tested. Many tests for quality are continuing to be requested and while some material meets the minimum standards during tests, other material is turning out to actually not be A500 grade tubing. This has resulted in the accumulation of a lot of material at the ports that traders cannot get off their hands. One source commented that there is currently a significant amount of tonnage sitting at an East Coast port that traders are willing to sell at nearly typical scrap price value just to get it off their hands.
All of this panic is creating bad publicity for import material, but may help the US domestic market to rebound. If imports continue to dry up, domestic mills may begin to fill up, whereas now they are fighting for orders. The lack of imports and the increase in flat rolled prices may push domestic tubing prices up as well. One buyer commented that he expects prices to go up as early as next week. He believes tubing producers will take advantage of the "bad steel" coming from China and raise prices before the flat rolled increase has gone through. "If tubing mills do not increase prices early on in September, they will definitely increase prices along with flat rolled on October 1st."
There is a lot going on in the US hollow sections market and all of it could have a very strong impact on pricing. However, as for now, prices are stable and have remained at the levels of our report two weeks ago. Domestic prices are ranging from $38.00 cwt. to $39.00 cwt. ($837 /mt to $860 /mt or $760 /nt to $780 /nt) for A500 grade A and grade B hollow sections up to 6" in the Midwest region.
Although there are no sales of Chinese hollow sections, offers are still out there and have stayed in the range reported by SteelOrbis two weeks ago. Offers range from $35.00 cwt. to $36.50 cwt. ($772 /mt to $805 /mt or $700 /nt to $730 /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 hollow section offers are now out there and have maybe sparked more interest than usual due to the "bad steel" arriving from China. Turkish hollow section offering prices have remained the same since our last report two weeks ago and are ranging from $37.00 cwt. to $38.50 cwt. ($816 /mt to $849 /mt or $740 /nt to $770 /nt) FOB, loaded-truck, US Gulf Coast ports.