US tubing market – Holding stable till year's end

The US hollow sections market seems to be holding up pretty well. Although the winter months and holidays are upon us, the market is stable and will remain so until the end of 2006. The domestic market remains steady, as prices have not taken a fall since the last significant drop in prices over a month ago. Current domestic tubing prices range from $44.00 cwt. to $45.00 cwt. ($970 /mt to $992 /mt or $880 /nt to $900 /nt) for A500 grade A and grade B hollow sections up to 6”. Larger and unusual sizes have large extras, some as high as double the base price, for example 14” and 16” tubing. These domestic prices will stick around throughout December as mills have no reason to lower their prices at this time. Demand for structural tubing is very strong, as the non-residential construction market is still hanging on tight. However, smaller-sized tubing, which is commonly used for ornamental purposes such as furniture and gates, is weaker than the larger sizes. Service centers will continue trying to reduce inventories for the next few weeks before year's end. However, they are also looking to the future, concentrating on ensuring a successful start to the New Year, booking imports in decent quantities for March and April arrivals. There is a significant gap right now between domestic and import prices, which is another factor which may contribute to a possible decrease in domestic tubing prices in early Q1. Buyers are taking advantage of the cheaper imports, as we are seeing a lot of recent import activity for March and April shipments. Due to recent flat-rolled decreases in Turkey, current hollow section import offers from Turkey have decreased by $0.50 cwt. since our last report and are now ranging from $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. These numbers find very few buyers. Chinese mills have been competing fiercely, taking advantage of the cheap hot rolled coils in China, producing hollow sections, and passing lower prices onto customers. In an attempt to to beat out any competition, Chinese mills have lowered tubing prices by $0.75 cwt. since our last report two weeks ago. Chinese hollow sections offerings now 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. Census data from the United States Import Administration for structural pipe and tube shows that during September, October, and November of 2006, the top five countries exporting these products to the US were: Canada at 61,683 mt; China at 40,618 mt; Turkey at 28,998 mt; Korea at 20,530 mt; and Mexico at 13,403 mt.