With no attractive import offers and higher raw material costs, the US domestic hollow sections market is getting ready for another price increase.
Independence Tube announced in mid-February that it will be upping tubing prices for March shipments by $2.00 cwt. ($44 /mt or $40 /nt). At press time, other major mills have yet to announce March prices; however, it is widely believed that the other major US tubing mills will be on board with this increase and will make formal announcements during the first week of March. Buyers have told SteelOrbis that it is highly likely that other domestic mills may even take it to the next level, and up prices by $3.00 cwt. ($66 /mt or $60 /nt) for March orders.
Going forward, more domestic tubing increases are expected. More flat rolled increases are anticipated for May, which will allow tubers to justify more increases on their side. The market is no longer as much demand-driven as it is cost-driven; tight supplies are causing flat rolled mills to up their prices, which in turn affects domestic tubing prices.
To recap, domestic tubing mills raised prices by $7.00 cwt. ($154 /mt or $140 /nt) in January alone, and then made mid-February price announcements, raising prices by an additional $3.00 cwt. ($66 /mt or $60 /nt) for orders effective immediately. Including Independence Tube's March price increase announcement, hollow section prices have increased by $12.00 cwt. ($265 /mt or $240 /nt) so far in 2008, and the pricing trend is pointing upwards.
Including the $2.00 cwt. increase for March orders, domestic hollow section prices now range from $50.00 cwt. to $51.00 cwt. ($1,102 /mt to $1,124 /mt or $1000 /nt to $1,020 /nt) for A500 grade A and grade B hollow sections up to 6" in the Midwest regions. Prices are $2.00 cwt. ($44 /mt or $40 /nt) higher for delivery to the West Coast.
West Coast mills, which mainly contribute to the tubing market with specialty sizes, are quoting their customers much higher numbers than their Midwest competitors.
Despite all of the price increases, demand is steady at best. Buyers are reporting that business is slightly down from earlier this year when a lot of hedge buying was occurring to avoid higher cost material down the road. Structural fabricators have commented that there are still job bookings, but that they have slowed down some in the last month.
The distressed square and rectangular tubing from China that did not meet the US specifications is still available for resale in the US and is priced at approximately $19.00 cwt. to $20.00 cwt. ($419 /mt to $441 /mt or $380 /nt to $400 /nt), loaded truck. The large domestic price increase will help to move this distressed material. There are still reports that some of this material is being exported to certain hot Asian markets.
On the import side, there is little trickling in. Some offers are afloat, but not at very attractive numbers. Most buyers have commented that, for now, most of their inventories are of domestic origin. The import offers are on the high side, and the gap between import and domestic numbers isn't large enough for buyers to rationalize purchasing offshore.
SteelOrbis has learned of some South Korean offers to the West Coast ranging from $46.00 cwt. to $47.00 cwt. ($1,014 /mt to $1,036 or $920 /nt to $940 /nt) FOB West Coast ports.
Due to rising flat rolled prices in Turkey, Turkish offers to the Gulf are up by $4.50 cwt. ($97 /mt or $88 /nt) since our last report three weeks ago and are now ranging from $48.50 cwt. to $49.50 cwt. ($1,069 /mt to $1,091 /mt or $970 /nt to $990 /nt) FOB Gulf ports.
SteelOrbis has also heard that Mexican offers to the Gulf region have increased significantly for April deliveries, but are still below the domestic price. Offers are said to be pricing out in the high $40's cwt.