The US market for standard pipe, used in construction for structural or transmission applications, continues to suffer along with the construction market. However, as with other steel product markets, suppliers note a slight up-tick in buyer interest in recent weeks due to indications that the market could be close to bottoming.
US ERW A53 BPE prices have dropped by more than half after peaking at as high as $90.00 cwt. just last summer. Currently, domestic mill offerings for A53 Grade A. BPE pipe range from approximately $35.00 cwt. to $37.00 cwt. ($772 /mt to $816 /mt or $700 /nt to $740 /nt) ex-mill, a few dollars per hundredweight higher than domestic hollow structural section offers. The pricing trend for domestic standard pipe is still pointed downwards as flat rolled costs continue to drop and end-use demand has yet to show any signs of lasting recovery.
On the bright side, the US standard pipe market is not as over-inventoried as the markets for API pipes, OCTG in particular. Furthermore, standard pipe imports have remained at low levels in recent months due to hesitancy of booking import tons in a down-trending market, especially China being unable to export welded standard pipe to the US because of antidumping. Nevertheless, pipe imports to the US started to decline long after those of other products due to an overabundance of material ordered when the market was at its peak and foreign mills had very long lead times. While US imports of most steel products started to taper off in the third quarter of last year, imports of standard pipe, as well as those of line pipe and OCTG, remained at high levels through January before falling off sharply in February (see accompanying chart for the US DOC's standard pipe import stats).
Although pipe imports have slowed to a trickle in recent months, US pipe mills, in order to ward off any future import surges, earlier this month filed antidumping and countervailing duty cases against both seamless and welded OCTG imports from China, based on the spike in imports in the third and fourth quarters of last year. With this latest filing, and welded standard pipe and welded line pipe imports from China already subject to heavy dumping duties, it seems that US pipe mills may just be able to shut out China from the US pipe market altogether.
Even with China gone, there are very few new import offers being booked from other sources as domestic mills have become more competitive and are able to quickly fill customers' needs. Customers prefer to buy domestic material due to the shorter lead times and lack of better-priced import options. Although there are import offers from Asian and Turkish sources (Turkish ERW A-53 BPE pipe is offered in the mid-$30's cwt., duty-paid, FOB loaded truck in the Gulf), traders say that the prices are comparable to domestic and it is not worth it for customers because of the longer import lead times. However, while domestic mills have re-gained the upper hand as regards market share, they are still not filling their order books since customers are still not convinced the market has bottomed out yet and do not want to hold inventory, only buying small tonnages on an as-needed basis.
Still, in recent weeks there have been at least a minor revival in pipe sales interest as most steel markets seem to be bottoming or are at least close to the bottom. One Gulf area pipe trader told SteelOrbis this week, “In my opinion, as far as steel demand, we are at the bottom now. We are seeing more inquiries and are a little more optimistic even though they aren't necessarily translating into deals.”
The trader also cautioned, however, that while steel demand has hit bottom, he does not believe the financial situation has, and thinks more bankruptcies will take place and that tight credit will continue to hamper the pipe market for some time.
