Booking activity for futures continues to be flat with the expectation that US domestic pipe prices will have declined substantially by the time orders placed today arrive.
US domestic service centers have been keeping inventories increasingly lean over the past few weeks in anticipation that spot prices will begin to come down in Q2-especially considering that spot prices for hot rolled coil (HRC) peaked late last week, and will begin to soften in the near future. Pipe mill sources have told SteelOrbis that activity in late March has already showed consistent slowing compared to February and early March activity.
"There is no confidence that current US pipe prices will sustain throughout the second quarter" explained one standard pipe trader in the South. If pipe prices do begin to stabilize then import activity will pick up, but with the expectation that even seasonal upticks in commercial construction-a major end-use sector for standard pipe-demand won't be strong enough to support US domestic standard pipe prices, spot prices will likely be waning by mid-Q2.
Consequently, interest in current offshore offers is sluggish. While traders indicate that a few small tonnage orders have been booked over the past few weeks, lead times are too far out to place any large orders. Korean and Taiwanese offers of electric resistance weld (ERW) black plain end (BPE) A53 Grade A standard pipe are unchanged from our last report two weeks ago, at 50.00-$51.00 cwt. ($1,102-$1,124/mt or $1,000-$1,020/nt) duty-paid FOB loaded truck in US Gulf ports. Delivery dates however are in June and July now-by which time US domestic prices for delivery in those months are expected to be on the decline.