The domestic pricing trend is flat for now; however hollow section prices may slip during the summer months unless the market sees a shift in demand.
The US tubing market is steady, but is by no means considered strong. With scrap prices dropping approximately $60 / long ton recently and flat rolled no longer on the rise, tubing prices are unlikely to increase for a while. In fact, producers will be lucky if they just remain stable.
Demand for hollow sections is just okay, meaning that mills are not booked to capacity. For larger structural sizes, the market is a little better only because the non-residential construction market continues to maintain its strength. The market for mechanical tubing, however, is considerably weak. Tubing producers were forced to realize this when in April they tried to push for a $40 /nt ($2.00 cwt. or $44 /mt) increase and later rescinded for certain markets and certain customers.
Domestic prices are currently in the range of $41.00 cwt. to $43.00 cwt. ($904 /mt to $947 /mt or $820 /nt to $860 /nt) for A500 grade A and grade B hollow sections up to 6" in the Midwest region and are expected to remain at that price for at least the next month.
Come June, however, market sources predict tubing prices may have a slight downward turn and then stabilize. Prices are expected to remain flat for the most part throughout the summer with a minor dip here or there (approximately $15 /nt or $0.75 cwt.), and then even out.
US service center tubing inventories are on the high side. There are also reports that some traders have long positions they bring to Gulf ports and try to sell them in small quantities. This is creating a big problem for the domestic mills. With imported material being much cheaper and immediately available (unlike the usual import delivery timeline), distributors are being enticed to purchase imported tubing at the ports instead of domestic material.
As for the import offers for shipments arriving in Q3, both Chinese and Turkish prices have remained stable since our last report two weeks ago. In China, however, the pricing trend is up, as sources say offering prices will be rising within the next couple of weeks due to the strengthening flat rolled market. Chinese mills are in competition with each other for all available US orders, as the incentive to ship tubing is a large one, thanks to the 13 percent VAT rebate.
Chinese offerings are still in the range of $31.50 cwt. to $33.00 cwt. ($694 /mt to $728 /mt or $630 /nt to $660 /nt) FOB West Coast, approximately $0.50 cwt. ($11 /mt or $10 /nt) higher on the Gulf Coast. East Coast discharge is approximately another $0.50 cwt. ($11 /mt or $10 nt) higher than the Gulf Coast.
In Turkey, flat rolled prices are firm but are not rapidly increasing, keeping the pricing trend for hollow sections neutral. Turkish hollow section offers are still ranging from $37.00 cwt. to $38.50 cwt. ($816 /mt to $849 /mt or $740 /nt to $770 /nt) for FOB, loaded truck, US Gulf Coast ports, with little to no takers.
License data from the United States Import Administration show for structural pipe and tube worldwide exports to the US totaled 62,184 mt in March 2007 and 54,528 mt in April 2007. For mechanical tubing, the numbers were quite similar with worldwide exports to the US, totaling 62,607 mt in March and 56,696 mt in April.