Weighed down by excess inventory at distributors and ports, the US standard pipe market continues its slow recovery but is unlikely to return to being an active market until sometime in 2010.
Although many other steel products will be receiving a boost from scrap cost increases this month, the US standard pipe market is unlikely to experience any near-term spot price or activity increases. And while US pipe mills may decide to take advantage of the domestic scrap price uptick and announce a moderate increase, there is very little demand for pipe expected over the next couple months, and so raising prices is unlikely to result in an increase in spot prices.
Furthermore, while US pipe demand has been lethargic throughout the year, it has weakened even further over the past several weeks, as pipe distributors are trying to reduce inventories as much as possible for taxation purposes. According to the most recent Metals Service Center Institute (MSCI) monthly report, while total inventories of domestic pipe and tube decreased from 577,000 nt in September to 551,000 nt in October, daily shipments of tonnage also decreased from September to October, at 8,800 nt and 8,200 nt respectively. Daily shipments during October matched April shipments as the lowest since December 2008.
Meanwhile, imports also continue to suffer from inadequate demand, stemming from an ongoing abundance of unsold material at US port docks. However, there has been a slight uptick in traders seeking offshore quotes over the past couple weeks, as they are trying to gauge the market and prices for the possibility of late first quarter to early second quarter shipments. Nevertheless, import lead times are not that far out yet, so it currently remains a waiting game.
The primary offshore standard pipe import sources to the US continue to provide offers despite the quiet demand. Leading the way for import ERW (electric resistance weld) BPE (black plain end) Grade A standard pipe offers is Korea, with most offers at approximately $36.50 cwt. to $37.50 cwt. ($805/mt to $827 /mt or $730 /nt to $750 /nt) duty-paid, FOB loaded truck in US Gulf ports. While the market is slow, Korean mills were forced to raise prices by about $2.50 cwt. ($55/mt or $50/nt) from the beginning of November due to rising hot rolled coil costs. A couple other sources, including the United Arab Emirates and Turkey, are also attempting to export the same product to the US; however, their offers are even higher, at approximately $38.00 cwt. to $39.00 cwt. ($838/mt to $860/mt or $760/nt to $780/nt) duty-paid, FOB loaded truck in US Gulf ports.
Meanwhile, ERW ASTM A53 galvanized plain end (GPE) standard pipe offers continue to be seen primarily from India. Indian mills increased their standard GPE offers by about $1.50 cwt. ($33/mt or $30/nt) earlier last month and have kept prices relatively neutral since our last report two weeks ago, with offers in the approximate range of $42.50 cwt. to $43.50 cwt. ($937 /mt to $959 mt or $850 /nt to $870 /nt) duty-paid, FOB loaded truck in US Gulf ports. Indian mills have no desire to chase after overseas orders at this point, although they may become aggressive in the near future if other Asian competition emerges.
License data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that total import tonnage of standard carbon steel pipe slightly decreased from 33,076 mt (preliminary census data) in October to 31,141 mt in November. The top five exporters of standard carbon pipe to the US during November were: Canada, at 13,494 mt; United Arab Emirates, at 3,051 mt; Korea, at 2,903 mt; India, at 2,422 mt; and China, at 2,167 mt.