US tube market is preparing for a quiet fourth quarter

The US domestic hollow sections market is facing a period where inventories are high and demand is slowing. Where both imports and domestics are concerned, the demand for tubing is flat, maybe even declining some. Compared with the same time last year, experts will agree that demand for tubing is slightly better now, but when comparing demand now with a few months ago, the need for tubing products has dropped off. The decrease in demand is mostly attributed to summer slow-down and to the sluggish residential construction activity. But it is possible that this slow-down could just be the general trend. As far as tube production is concerned, flat rolled prices are decreasing, causing an expectation of a softer tubing market. With the negative expectations, mills are also seeing a decline in new bookings. This may have something to do with service centers having heavy inventories right now, partially thanks to piling import shipments, which consequently may cause tubing prices to drop a bit in the near future. However no one is expecting a major price decrease for October or November. There have been talks of an increase in pipe prices from mills, but this will not be affecting the tubing market. Unlike the pipe market, the market for tubing is not strong enough to support such a jump at this time. Current domestic square and rectangular tubing prices are still ranging from $47.00 cwt. to $48.00 cwt. ($1,036 /mt to $1,058 /mt or $940 /nt to $960 /nt) for A500 grade A and grade B hollow sections up to 6”. Larger section have less domestic and import competition and are sold at significant premiums. From an import perspective, flat rolled prices are softening, causing a downward pricing trend in the tubing market. It has been a quiet fourth quarter where imports are concerned, and most service centers are in the mode of inventory reduction until the end of the year. This is all having a significant impact on tubing imports. The next big booking period will be for January arrivals. Softening flat rolled prices have been giving some room for Turkish and Chinese tubing prices to go down. Import Turkish offers now range from $33.00 cwt. to $34.50 cwt. ($728 /mt to $761 /mt or $660 /nt to $690 /nt) for FOB, loaded truck, US Gulf Coast ports, a $1.00 cwt. decrease from our report two weeks ago. China's prices have decreased $0.50 cwt. since our last report, with prices now ranging from $31.50 cwt. to $33.50 cwt. ($694 /mt to $739 /mt or $630 /nt to $670 /nt) FOB West Coast ports, and are approximately $0.50 cwt. ($11 /mt or $10 /nt) higher for the US Gulf ports discharge.