Spot prices for Midwest US hollow structural section (HSS) tubing have trended sideways since our last report two weeks ago. This marks the fourth straight week HSS transaction prices have maintained their current level, in that previously heard rumblings of additional mill increases for this particular product failed to reach fruition.
Most domestic HSS spot offers continue to be seen in the approximate range of $45.00 cwt. to $46.00 cwt. ($992/mt to $1,014/mt or $900/nt to $920/nt) ex-Midwest mill. It should be noted though, that it is being indicated a renewed willingness to cut deals has begun to emerge as sellers continue to compete for a limited number of orders.
While order placement within the agricultural equipment segment continues to fare better than other end-use markets, the total amount of agricultural business is not enough to support the order books of all the domestic tubing mills and manufacturers. To some service centers, this represents a certain level of concern. "There are 28 large tubing manufacturers in the US, and if one of them looks at the market and cuts their price, a few others will likely follow which could bring the whole market down," commented one purchasing manager.
In terms of other order activity, depending on the region of the country, orders and inquiries have trended neutral to slightly down, and several service centers have indicated they're trimming already slim inventories so as to minimize the risk to their bottom line should prices indeed begin to soften. And as with buyers of hot dipped galvanized (HDG) coils, the current stance seems to be wait-and-see, as an increased level of cautiousness has begun to saturate the marketplace.
For now, however, the forecast for HSS indicates a strong probability of a $2.00 cwt. to $3.00 cwt. ($44/mt to $66/mt or $40/nt to $60/nt) spot price softening prior to the close of the third quarter, as indicators point to a similar adjustment for hot rolled coils (HRC).
Looking offshore, the only significant importer for HSS tubing is Korea, which has offerings in the approximate range of $41.00 cwt. to $42.00 cwt. ($882/mt to $904/mt or $800/nt to $820/nt), duty-paid, FOB loaded truck to the West Coast.