US tubing market – Domestic tubing softens along with HRC

The softening domestic flat rolled market has caused tubing mills to cave in and lower prices one more time before the end of the year. Prices for domestic flat rolled products have been dropping significantly over the past few months and are believed to be close to bottoming out. Currently most domestic flat rolled offers are as low as $26.00 cwt. ($573 /mt or $520 /nt) for hot rolled. It was only a matter of time before this situation affected prices for hollow sections again. Because customers are hearing about the cheaper raw materials, they have been demanding lower tubing prices, and it looks like the buyers are getting their wish. Tubing prices have slid approximately $2 cwt. ($44 /mt or $40 /nt) since our last report two weeks ago and now range from $42.00 cwt. to $43.00 cwt. ($926 mt to $948 /mt or $840 /nt to $860 /nt) for A500 grade A and grade B hollow sections up to 6”. SteelOrbis has even heard numbers lower than $40 cwt. from certain Midwest tube makers. Also, Mexican tubing is offered at numbers very close to competitive Chinese imports. Even though hollow section prices took a fall, the market itself is still doing well. Demand for structural tubing is pretty strong. Despite the slow holiday season and cold winter months, the non-residential construction market is still holding on, especially on the West Coast and in Houston. Service centers are ending their “inventory reduction mode” now that the end of 2006 is approaching. They are now looking to build up their stocks and kick off a prosperous new year. Import bookings have been taking place in large quantities for late first quarter arrivals. With import prices on the low side, buyers are taking advantage of this, hoping to replenish their inventories with low-priced goods and make a profit in the later months. Over in Turkey, flat rolled prices seem to be bottoming out, and tubing offers have remained the same since our last report. Turkish hollow section offers are still in the range of $32.50 cwt. to $34.00 cwt. ($717 /mt to $750 /mt or $650 /nt to $680 /nt) for FOB, loaded truck, US Gulf Coast ports. Although Chinese prices have also remained the same since our last report, mills are still competing fiercely with significantly lower numbers. Chinese hollow sections offerings still range from $30.00 cwt. to $31.50 cwt. ($661 /mt to $694 /mt or $600 /nt to $630 /nt) FOB West and Gulf Coast. East coast discharge is approximately $0.50 cwt. ($11 /mt or $10 /nt) higher. The market dynamics have changed a bit, however. While Turkey and China used to be in heavy competition, both shipping to mainly Gulf ports, Turkey has started to send more shipments to the East Coast and Great Lakes regionv -- areas where Chinese tubing is not coming in. China has continued shipping quantities to the Gulf and West Coast.