As SteelOrbis predicted in our last tubing analysis two weeks ago, domestic tubing producers upped their prices another $100 /nt, and insiders suggest that there is still at least one more increase coming our way.
As expected, tubing mills followed the increasing flat rolled prices and raised their prices $100 /nt ($5.00 cwt. or $110 /nt) across the board as of May 23, 2008. The most recent increase brings domestic hollow structural section (HSS) prices to a range of $73.00 cwt. to $74.00 cwt. ($1,609 /mt to $1,631 /mt or $1,460 /nt to $1,480 /nt) for A500 grade A and grade B hollow sections up to 6" in the Midwest regions.
According to market insiders the increases are not over, although more are not going to come right away. Finally, the mills are said to be current with their costs and as of right now have no reason to increase prices another notch. After almost six months of playing "catch-up," tubing mills are finally at a comfortable place. However, both raw material and flat rolled prices are expected to increase again, at least slightly, which will give domestic tubing mills the go-ahead to boost their prices one more time.
Another increase from the mills is expected in late June or early July according to buyers, and could be in the area of $5.00 cwt. ($110 /mt or $100 /nt) yet again. After this increase, however, buyers may find the relief they have been looking for as the constant price increases may finally cease. Nothing drastic is expected to happen as far as domestic prices are concerned, but once mills push through this mid-summer increase, prices are expected to stabilize and possibly stair-step down.
On the demand side, things are beginning to slow down, which may just be the usual summer doldrums, or it could be that the market is beginning to soften. Service centers are reporting weaker business, and large projects for fabricators are experiencing lag times.
Import offers are still surfacing at attractive numbers. Whereas a couple months ago, import offers were either non-existent or completely unreasonable, now we are beginning to see more eye-catching numbers, especially since domestic prices increased again. Some buyers are jumping on the opportunity to purchase lower-priced steel, though others are not willing to make the risky move, believing that by the time the imported material arrives, the going price for HSS may actually be lower.
Turkish offerings to the Gulf Coast are still pricing out at $63.00 cwt. to $64.00 cwt. ($1,389 /mt to $1,411 /mt or $1,260 /nt to $1,280 /nt) FOB, loaded truck, US Gulf ports. These offerings are for heavy wall A500 Grade B material that has not been affected by the antidumping determination. Although these offers are available at reasonable numbers, traders are having difficulty finding ships to get the material to the US.