With US flat rolled prices continuing to escalate, domestic pipe prices are also expected to continue their ascent this year. And though demand for standard pipe isn't ideal, distributors say that customers are adjusting well to the rapidly increasing prices.
ERW standard pipe is not seeing as strong of a demand as API-certified pipe, as standard pipe is more affected by the residential construction sector, while API pipes are in high demand for the booming oil and natural gas markets. However, in addition to pipe producers' need to recover their increasing steel making costs from the rising flat rolled prices, with Chinese ERW standard pipes out of the picture, there is nowhere for domestic prices to go but up.
Since Chinese pipes made up such a huge part of the ERW standard pipe market until the antidumping and countervailing duty cases were brought against the Chinese pipe mills last year, their absence has left a gaping hole in the market that no other import sources have yet filled. Since domestic capacity is not large enough to meet the domestic demand for these pipes, domestic prices will continue to rise until cheaper imports start to appear on the scene. And with the US dollar continuing to weaken, it is unlikely that this will happen anytime soon. Distributors are relying much more heavily on domestic pipe due to the lack of imports, which is also giving domestic mills more impetus to continue raising prices.
The current domestic price range for ERW A53 BPE pipes is approximately $1,045 /nt to $1,085 /nt ($1,152 /mt to $1,196 /mt or $52.25 cwt. to $54.25 cwt.) ex-Midwest mills. The pricing trend is strongly up as mills are expected to hike prices for May and possibly June shipments to reflect the flat rolled price increases. The extra for galvanized ranges from approximately $230 /nt to $250 /nt ($254 /mt to $276 /mt or $11.50 cwt. to $12.50 cwt.) depending on the mill.
On the import side, there are very few offers currently. While it is not a secret that Chinese mills continue to export galvanized seamless standard pipes (A106) to the US at good prices, often seen as a way to circumvent the antidumping cases as these pipes can be used in similar applications as standard pipe, a closer eye has been turned to these activities and traders are hesitant to bring in these pipes for this reason. Chinese mills are also nervous about acquiring more antidumping duties, so sources tell SteelOrbis that the Chinese galvanized seamless imports have slowed down some recently. There are some imports of A106 pipe from Eastern European sources, but they are priced much higher than the Chinese prices and would not be a bargain to substitute for ERW standard pipe.
India has a been a substantial source of import pipes for the US in recent months, but currently there are very few offers due to the rising prices of hot rolled coils in the region and the lack of availability. They are currently still offering some A106 pipes, but they are not very competitive and continue to rise rapidly.
Preliminary Census Data from the US Import Administration show that carbon standard pipe imports (category includes welded and seamless) to the US totaled 60,514 mt in February, compared to 75,942 mt the year before. Canada accounted for the bulk of standard pipe imports in February 2008, at 28,697 mt, distantly followed by Mexico (5,694 mt), Taiwan (5,506 mt), South Korea (3,656 mt), and China (3,294 mt). A year ago, China was the top import source for standard pipe at 26,773 mt.