US hollow sections market – Domestic prices fall another notch

Although the domestic tubing market has slowed down considerably from its peak, with prices falling during the fourth quarter of 2006, most buyers are still optimistic for 2007. We are now at the beginning of the New Year, and things are slowly starting to pick up. Service centers are replenishing their inventories as demand still remains strong. The non-residential and industrial construction market is still active and has helped the tubing market to maintain its strength throughout the last couple of months. Market players say that in the next couple of weeks, business will continue to gradually pick up to start off a good first quarter. The domestic flat-rolled market now seems to have bottomed out, however, the steep price decreases HRC experienced over the past few months are now translating into a price decrease for tubing. SteelOrbis has learned that domestic hollow section prices have fallen another notch, now ranging from $41.00 cwt. to $42.00 cwt. ($904 /mt to $926 /mt or $820 /nt to $840 /nt) for A500 grade A and grade B hollow sections up to 6”. This price drop represents a $1.00 cwt. ($22 /mt or $20 /nt) decrease since our last report two weeks ago. SteelOrbis has even heard numbers lower than $40 cwt. from certain Midwest tube makers. Still, domestic producers are fetching significantly higher prices than the imports. The Houston market is now seeing some aggressive Mexican numbers for tubing up to 6” with offers as low as $31.00 cwt. ($683 /mt or $620 /nt). Imports from China and Turkey are also on the low side, creating a large gap between domestic and import prices. Some buyers are taking advantage of these low-priced imports with many bookings taking place in large quantities for late first quarter and early second quarter arrivals. Turkish hollow section offers to the US have decreased by $0.50 cwt. since our report two weeks ago and now range from $32.00 cwt. to $33.50 cwt. ($705 /mt to $739 /mt or $640 /nt to $670 /nt) for FOB, loaded truck, US Gulf Coast ports. Chinese hollow sections offerings have also decreased by $0.50 cwt. since our last report and now range from $29.50 cwt. to $31.00 cwt. ($650 /mt to $683 /mt or $590 /nt to $620 /nt) FOB West and Gulf Coast. East coast discharge is approximately $0.50 cwt. ($11 /mt or $10 /nt) higher. Compared to Turkish offers, Chinese mills are still competing with significantly lower numbers. However, Turkish mills are now concentrating on shipments to the East Coast and Great Lakes regions, areas where China has limited penetration.