Despite market activity remaining depressed, US hollow structural section (HSS) mills were able to announce another significant price increase at the beginning of this month and are expected to push for further increases by the first week of February.
Due to the continued uptick of raw material and flat rolled coil prices, US tubing mills increased HSS prices an additional $3.00 ($66/mt or $60/nt) less than two weeks ago, making for a total price hike of about $6.00 cwt. ($132/mt or $120/nt) since the beginning of December. More impressive than the drastic increases in mill offer prices is that spot prices relatively kept pace. While customers with strong mill relations requesting significant tonnage may still be able to get discounts up to $2.00 cwt. to $2.50 cwt. ($44/mt to $55/mt or $40/nt to $50/nt), below the average mill asking price, discounts for these types of orders were upwards of $4.00 cwt. ($88/mt or $80/nt) just a few months ago.
Currently, most HSS tubing spot market prices are ranging from approximately $38.00 cwt. to $39.00 cwt. ($838/mt to $860/mt or $760/nt to $780/nt) ex-mill, while mills are pushing to get about $40.00 cwt. to $41.00 cwt. ($882/mt to $904/mt or $800/nt to $820/nt) ex-mill. Furthermore, as a result of the most recent hot rolled coil price increases, distributors expect HSS mills to increase prices by another $2.00 cwt. to $2.50 cwt. by the first week of February.
However, despite the rising prices, most tubing distributors remain reserved in their market expectations because they have yet to see much improvement in demand. With many pending new construction projects still on hiatus, buyers are remaining cautious. If scrap and coil prices reach a peak, HSS prices will be extremely vulnerable since there may not be enough demand to prevent the bubble from bursting.
Meanwhile, offshore tubing sources remain very quiet. Traders aren't inclined to go looking for offers because they know no offers are worth pursuing at this point, and the usual competitive sources like Taiwan and Korea haven't been making any noise. While US domestic tubing prices have been escalating, coil prices overseas have also been climbing, making it difficult for offshore sources to offer competitive rates. Even if competitive offers from offshore sources were to emerge, there is too much skepticism concerning the longevity of the current uptick to warrant taking a risk, especially taking the long import lead times into account. Most buyers are hedging their bets and are content with just buying what they need, even if they may end up paying more later, because there is too much risk in buying solely based on climbing prices.
License data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that total import tonnage of structural pipe and tube increased from 15,513 mt in November (final census data) to 19,202 mt in December. The top three exporters of structural pipe and tube to the US in December were Canada, at 10,933 mt, Korea, at 3,263 mt; and Mexico, at 3,033 mt.