Pressured by the recent flat rolled price increases, US tubing mills increased hollow structural section (HSS) prices a little over a week ago; however, distributors question whether this move was made too hastily considering the weakness of demand.
After US mills' latest increase of $1.50 cwt. ($33 /mt or $30 /nt), the current listed range for HSS tubing is at about $31.00 cwt. to $32.50 cwt. ($683 /mt to $717 /mt or $620 /nt to $650 /nt) ex-mill, for ASTM A500 Grade A and B, up to 6". Despite the recent price increase, many customers are still finding spot deals for around $2.00 cwt. ($44 /m tot $40 /nt) under listed prices and may be able to negotiate prices even lower, depending on order quantity and specifics.
While US flat rolled mills have been able to establish two significant price hikes over the past three weeks despite lackluster demand, US tubing mills may not even be able to sustain their one price increase. US tubing demand remains extremely poor and service centers are still in the de-stocking phase. According to the most recent Metal Service Center Institute (MSCI)'s monthly shipment and inventory report, pipe and tubing products have an overhang of about 3.9 months in the service center warehouse, which is among the highest of all steel products. Furthermore, while daily shipments increased in May from April, to 8,500 nt from 8,200 nt respectively, monthly shipments still decreased from 179,800 nt in April to 170,600 nt in May.
Domestic tubing prices may be able to remain stable in the near future if scrap and flat rolled prices continue to increase; however, sustaining a solid price increase will require tubing demand to pick up somewhat.
On the import side, foreign offers to the US have become extremely quiet. Mexico provided some truckloads to the US earlier in the month, at around $27.00 cwt. ($595 /mt or $540 /nt) delivered to Texas and California, but has gone silent since. One trader told SteelOrbis, "The import market is dead right now." The virtual non-existence of import offers to the US right now has undoubtedly contributed to US mills raising prices despite the dormant demand.
