US domestic and import standard pipe prices continue to soar, and although there is growing concern of an ever-increasing price bubble, most of today's buyers are doing their best to avoid potential ramifications should 2008 repeat itself.
Imported electric resistance welded (ERW) black plain end (BPE) A53 Grade A standard pipe offers from Korea climbed, on average, another $3.00 cwt. ($66/mt or $60/nt) since our last report two weeks ago and now range from approximately $46.50 cwt. to $48.00 cwt. ($1,025/mt to $1,058/mt or $930/nt to $960/nt) duty-paid, FOB loaded truck in US Gulf ports. However, despite the recent Korean increase and the fact that their offers were already priced significantly higher than most of their competition just a couple weeks ago, Koran offers have started to become a bit more competitive. This is due in large part to most Turkish BPE standard pipe offers increasing an estimated $4.00 cwt. ($88/mt or $80/nt) during the same time frame, which has slightly closed the price gap with most offers now being seen at around $45.00 cwt. to $46.00 cwt. ($992/mt to $1,014/mt or $900/nt to $920/nt) duty-paid, FOB loaded truck in US Gulf ports. Furthermore, offers from Thailand have recently emerged within the range of about $46.00 cwt. to $47.00 cwt. ($1,014/mt to $1036/mt or $920/nt to $940/nt) duty-paid, FOB loaded truck in US Gulf ports.
Meanwhile, domestic ERW BPE A53 Grade A and B standard pipe prices have remained fairly stable over the last two weeks but buyers expect mills to announce further increases over the next week or two as a result of the most recent flat rolled increases. Domestic Grade B offers have already increased an average of $7.50 cwt. ($165/mt or $150/nt) since the beginning of January, and are currently ranging from approximately $58.00 cwt. to $60.00 cwt. ($1,279/mt to 1,323/mt or $1,160/nt to $1,200/nt) ex-Midwest mills.
Many US standard pipe buyers are growing increasingly worried about the ever-growing prices for both domestic and imported product, especially since it is not fully demand driven,. Thus, buyers fear an evident bubble that could burst, much like in 2008, once scrap pricing drops or inventory levels increase. But the difference between today and 2008 is that most buyers learned their lesson from two years ago and are keeping most buys to minimal tonnage, reducing the chance of getting stuck with expensive product if prices fall off a cliff. "People are smarter these days and are buying much smaller quantities today despite the chance they may have to buy again in a month or two at a higher price," one distributor told SteelOrbis. While actual demand for standard pipe is unlikely to experience any vast improvement this year, the market can still be managed and a 2008 scenario may be avoided if buyers continue booking at only increments that they need.
Furthermore, Indian mills are currently assessing the standard BPE and galvanized plain end (GPE) market. Indian GPE has remained the most attractive importer of GPE to the US over the past several months. However, Indian mills have pulled all BPE and GPE offers since last week and will come out with a new price next week by April 1. Some traders expect the Indians to come out with a bold increase of approximately $5.00 cwt. (110/mt or $100/nt) to capture the ongoing scrap and flat rolled price increases, while others believe that Indian mills are growing concerned of a possible price crash and thus may be more cautious with new prices. The last reported Indian GPE price, which is no longer valid, was two weeks ago at approximately $47.00 cwt. to $48.00 cwt. ($1.036/mt to $1,058/mt or $940/nt to $960/nt) duty-paid, FOB loaded truck in US Gulf ports. Standard pipe prices have escalated significantly this year and many traders now wonder whether current prices or any future increases will be worth the risk for mid-summer arrivals. Licensing data from the US Steel Import Monitoring and Analysis System (SIMA) indicate that after standard carbon steel imported tonnage reached a 12-month high in January at 8,853 mt, tonnage reduced to 4,599 mt in February and was at only 861 mt through the first 16 days of March.
