Weak demand and falling flat rolled numbers have pushed tubing mills to drop prices further and some buyers suspect there is still more room to fall.
In the last month, on average, hollow structural section (HSS) prices have fallen approximately $8.00 cwt. ($176 /mt or $160 /nt), which seems minimal compared to how hard and fast hot rolled coil (HRC) prices have plummeted in the last month, which is leading buyers to believe the bottom is not here just yet.
In the beginning of October, HRC spot prices were approximately $42.00 cwt. ($926 /mt or $840 /nt) and can now be found at and around $30.00 cwt. ($661 /mt or $600 /nt) on the lower end. Considering the large price decrease that has taken place for flat rolled products, a raw material for tube producers, buyers suspect more decrease are to come.
Although mills are officially offering at a slightly higher range, realistically most buyers can find domestic hollow structural sections (HSS) in the range of $56.00 cwt. to $57.00 cwt. ($1,235 /mt to $1,257 /mt or $1,120 /nt to $1,140 /nt) for A500 grade A and grade B hollow sections up to 6" ex-mill. For the right inquiry, these numbers can easily be achieved and if the tonnage is significant, mills will go even lower than $56 cwt.
At this point, even though tube manufacturers are trying hard to get business by slashing prices, there is very little buying activity, leaving mills with an excess of floor stock. End-use demand is still soft and steel service centers are in the midst of reducing inventories before year's end.
Tube mills have been reducing prices incrementally, hoping to protect their customers some by not devaluing their customers' inventories too quickly.
Going into 2009, however, it's tough to pinpoint where prices will wind up. In the immediate future, it's almost certain that prices will continue on a downward trend, but some market players seem optimistic for Q1. With production cut backs come longer lead times and less availability, which may tighten up the market as mills intended and drive prices back up.
On the import side, some attractive offers are out there, though there are not many takers. With minimal demand and no idea where the domestic market will wind up by the time the imports arrive in late first quarter, it's a bit risky for most buyers; however the gap is opening, and, for some, the prices are at low enough levels to commit.
Offerings from Turkish mills are now in the range of $42.00 cwt. to $43.00 cwt. ($926 /mt to $948 /mt or $840 /nt to $860 /nt) FOB, loaded truck, US Gulf Coast ports. The above are base prices, with larger and thicker tubes carrying significant extras.
Mexico is offering HSS delivered to the West Coast at approximately $54.00 cwt. to $55.00 cwt. ($1,191 /mt to $1,213 /mt or $1,080 /nt to $1,100 /nt). Ornamental sizes are several dollars more than the structural sizes.
South Korea has also tried to get back into the US market, though their offering levels are fairly close to US domestic levels, and are not finding many takers.