The US hollow structural section (HSS) market continues to see little progress or activity, which has led to another domestic price decrease.
SteelOrbis hears that US tubing mills will lower their domestic HSS transaction prices by at about $2.00 cwt. ($44 /mt or $40 /nt) within the next couple business days due to the ongoing weak demand and lack of consumer confidence. Some distributors feel that mills could lower prices by as much as $3.00 cwt. ($66 /mt or $60 /nt), which would more accurately depict current market activity, or lack thereof, but that a $2.00 cwt. decrease is more likely.
Taking into account the $2.00 cwt. decrease, official domestic HSS prices at the mill level will drop to about $32.50 cwt. to $33.50 cwt. ($717 /mt to $739 /mt or $650 /nt to $670 /nt) for A500 grade A and grade B hollow sections up to 6" ex-mill in the Midwest. However, some domestic mill offers have been quietly offered at this new range for the last couple weeks, so following the official decrease, customers will likely be able to negotiate prices further downward depending on order quantity and specifics.
Furthermore, US flat rolled prices continue trending downward, providing the tubing market with little hope of reaching the bottom anytime soon. However, some tubing distributors are holding onto hope and believe that demand levels are very close to the bottom, mostly because of overdue projects and the seasonal up-tick that normally takes place this time of year; however, few things have been happening "normally" lately in the context of the current recession.
On the import side, most foreign mills have been lowering their offers to the US to stay competitive with domestic mills but have found that US mills are offering aggressively and with shorter lead times. Import lead times, currently for June or July, are making bookings especially difficult for importers to achieve, regardless of price.
Mexico's proximity to the US border continues to make it the primary competitive foreign source offering tubing to the US. Mexican HSS tubing offers to the US decreased by approximately $3.00 cwt. ($66 /mt or $60 /nt) over the past couple weeks and now range from about $34.00 cwt. to $35.00 cwt. ($750 /mt to $772 /mt or $680 /nt to $700 /nt) delivered to Texas and California. However, Mexican mills will most likely still be willing to offer significant discounts on certain orders depending on order size and specifications.
The only other foreign source offering HSS tubing to the US that is demonstrating signs of remaining aggressive and active, is Turkey. SteelOrbis has learned that Turkish mills have lowered their offers by about $4.00 cwt. ($88 /mt or $80 /nt) since our report two weeks ago, to a range of approximately $31.00 cwt. to $32.00 cwt. ($683 /mt to $705 /mt or $620 /nt to $640 /nt) FOB loaded truck, US Gulf Coast ports. But despite Turkish mills' best efforts, most customers do not see enough of a benefit to justify booking.
Furthermore, preliminary licensing data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that total import tonnage of structural pipe and tube has continued to decrease on a monthly basis, a trend which started in September 2008. Tubing imports totaled 18,576 mt in March, reflecting a decrease of 21 percent from decreased from February, when imports totaled 23,573 mt, and a 54 percent decrease from the 40,596 mt imported in March 2008.