US domestic hollow structural section (HSS) prices have continued on a decline in recent weeks, as demand is still very weak, and flat rolled numbers are still falling.
Since SteelOrbis' last tubing analysis of two weeks ago, official transaction prices at the mill level for HSS have fallen approximately $3.00 cwt. ($66 /mt or $60 /nt) and are expected to come down even further before the holidays. Another price decrease is expected within the next week or two, with the trend continuing through the New Year.
Official HSS prices are now in the range of $51.00 cwt. to $52.00 cwt. ($1,124 /mt to $1,146 /mt or $1,020 /nt to $1,040 /nt) for A500 grade A and grade B hollow sections up to 6" ex-mill. However, many buyers say mills are willing to go a few dollars lower, especially for larger sized orders. For the right inquiry, mills are said to be going close to mid-40's.
According to buyers, we are still not at the bottom, as price decreases are anticipated at least through the end of January with numbers expected to bottom out in the range of $40.00 cwt. to $42.00 cwt. ($882 /mt to $926 /mt or $800 /nt to $840 /nt) ex-mill Midwest.
The main culprit behind the mills' price slashing is weak demand. Even though busheling scrap prices are headed up, an increase in tubing prices is not expected within the next four weeks. As one buyer put it, "We'll have to see a major turnaround in demand before we see tubing numbers heading back up again."
On the import side of the market, traders are offering very reasonably-priced imports from various offshore sources; however, as demand in the US remains extremely weak, there are very few jumping on the opportunity to buy the low-priced steel.
Some Mexican mills are aggressively offering to the US at numbers in the range of $39.00 cwt. to $41.00 cwt. ($860 /mt to $904 /mt or $780 /nt to $820 /nt) delivered to the Gulf and West Coast.
Turkey has drastically slashed its numbers in the last couple of weeks to encourage some buying activity, although there are few takers, mainly due to the US demand situation, as well as the typical seasonal slowness from the approaching holiday season.
Most Turkish HSS offers to the US are now ranging from $35.00 cwt. to $37.00 cwt. ($772 /mt to $816 /mt or $700 /nt to $740 /nt) FOB loaded truck, US Gulf Coast ports.
As China's home market is facing some tough times, the world's number one steel producer has lifted its fifteen percent export tax on HSS to encourage offshore buying; however most US buyers remember the nightmarish quality issues of last year and are afraid to go near Chinese material.
Overall, the import market has been particularly slow in 2008 when compared to previous years, but with offshore offers becoming more competitive, if demand picks up, 2009 may show a different trend.
Data from the US Import Administration show a significant decline in the amount of import tonnage arriving to the US when comparing the three month span of September, October, and November of this year with 2007. For structural pipe and tube, worldwide tonnage to the US totaled 44,199 mt, 49,443 mt, and 39,736 mt in September, October, and November of 2007 respectively, whereas in the same months in 2008, import tonnage totaled 43,291 mt, 30,425 mt, and 24,878 mt (Based on Census and License Data from the US Department of Commerce).