US import line pipe market gets shaken up by tariff exemption for South Korea

Friday, 23 March 2018 21:32:47 (GMT+3)   |   San Diego
       

Yesterday, the Trump administration announced that South Korea would be added to the Section 232 exemption list, which has many in the US market who rushed to buy Mexican line pipe last week wondering if they made a mistake.

Last week, when the Trump administration announced that Mexican steel would be exempt from the 25 percent Section 232 tariff, buyers rushed to book orders, because Mexican pricing for this product in the US domestic market was, and still is, being sold at approximately $60 cwt. ($1323/mt or $1200/nt), FOB Houston.

Considering that pricing for US domestic API X-52 line pipe is still trending at $60-$65 cwt. ($1323-$1433/mt or $1200-$1300/nt), ex-mill, Mexican pricing was favorable.

But now that South Korea has been added to the exemptions list, buyers are questioning whether mills in that country will resume offering, because if new pricing is consistent with levels seen prior to the Section 232 announcement, this could have Korean API X-52 priced at approximately $45 cwt. ($992/mt or $900/nt).

“I think it’s safe to say that all the people who rushed out to buy from Mexico last week are hardly running down the hallway and giving each other high-fives,” a source said on Thursday afternoon. “But at this point it’s impossible to predict what will happen because things are changing every day, because the Trump administration can’t seem to make its mind up.”

That point was hammered home today, when the US Customs and Border Protection agency announced that the Section 232 tariff exemptions for all countries, including Canada and Mexico, will expire in 30 days.

“This just crazy,” said another source who purchased pipe from Mexico last week. “When we made that buy, the delivery date was after May 1. If we’re now going to have to pay an extra 25 percent on that, this is a nightmare.  I’m supposed to have a conference call with customers today to talk about what happened yesterday, but now it looks like we’re going to need to have a completely different conversation.”


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