With US mills' latest $75 /nt price increase for welded pipe expected to be accepted by the market, the new domestic price level for March shipments of A53 standard pipe is $48.25 cwt. to $50.25 cwt. ($1,064 /mt to $1,108 /mt or $965 /nt to $1,105 /nt).
The March price increase is the second for welded standard pipe this year, and did not come as a surprise, since due to the rising flat rolled prices, customers were expecting an increase of at least $50 /nt ($55 /mt or $2.50 cwt.). Including the January price increase, standard pipe prices have risen by a total of $125 /nt ($138 /mt or $6.25 cwt.) so far this year.
While demand has been negatively affected by the severe downward momentum of the housing market, the commercial construction market, which accounts for a large portion of standard pipe end use, has kept overall demand for ERW standard pipe relatively solid. In addition to the demand for commercial construction applications, the upward price drivers for domestic pipe continue to be rising flat rolled costs as well as the lack of Chinese imports. Chinese imports will remain out of the market for some time, as the DOC's preliminary results of the AD and CVD duty investigations against Chinese standard pipe showed significant levels of dumping and countervailing duties.
For now, the domestic pricing trend for ERW standard pipe remains up due to the aforementioned factors, as the flat rolled market continues to tighten and no major import sources have stepped in to fill China's shoes. In the long run, the health of the US economy will ultimately determine the pricing trend - there is a possibility that if the US enters into a full-blown recession that the non-residential construction markets could start to sink along with housing.
On the import side, there are a few offers here and there, but no source is offering in a major way or at very competitive numbers. The import pipe pricing trend remains strong because of rising flat rolled prices across the world and the improving price environment in the US.
New offers for ERW A53 from Turkish mills range from approximately $46.00 cwt. to $47.00 cwt. ($1,014 /mt to $1,036 /mt or $920 /nt to $940 /nt) FOB, loaded truck, in US Gulf ports, representing an increase of $2.50 cwt. since our last report issued January 1. These numbers have risen so significantly in recent weeks due to the rising flat rolled prices in Turkey's domestic market.
India is also offering some standard pipe - Offers for BPE pipe, two inches in diameter, currently range from $44.00 cwt. to $45.00 cwt. ($970 /mt to $992 /mt or $880 /nt to $900 /nt) FOB, loaded truck, US Gulf ports.
Although China can no longer export ERW standard pipe to the US, it continues to export ERW line pipe. Offers for API 5L X42 pipe ex-China continue to range from $44.00 cwt. to $45.00 cwt. ($970 /mt to $992 /mt or $880 /nt to $900 /nt) FOB, loaded truck, US Gulf ports, though if the VAT rate changes as some anticipate, importers and the producing mills will have to share the extra cost, which could be as high as $100 /mt.
China also continues to be a major source of OCTG to the US market, and is currently offering seamless API 5CT J55 at a range of $45.00 cwt. to $46.00 cwt. ($992 /mt to $1,014 mt or $900 /nt to $920 /nt) FOB, loaded truck, in US Gulf ports.