US tubing market – Raw material costs drive up prices

As was expected, the rising cost of raw materials has driven prices for hollow sections up in both the domestic and import markets. Scrap prices are increasing worldwide, driving prices for flat rolled material up as well. Chinese mills have been passing along flat rolled increases to hollow sections, continually upping prices. Most recently, Chinese tubing offers to the US have increased by $1.00 cwt. ($22 /mt or $20 /nt). This increase cannot be blamed on rising flat rolled prices alone though. Ocean freight rates have been steadily increasing as well, by at least $5 /nt ($0.25 cwt. or $5.50 /mt), forcing mills to up their prices to make up for the rising transportation costs. The pricing trend is now up, with room for prices to increase even more. Chinese offers now range from $32.50 cwt to $34.00 cwt. ($717 /mt to $750 /mt or $650 /nt to $680 /nt) FOB West Coast, approximately $0.50 cwt. (11 /mt or $10 /nt) higher on the Gulf Coast. East Coast discharge is approximately another $0.50 cwt. ($11 /mt or $10 nt) higher than the Gulf Coast. In Turkey, mills have been anxious, raising hollow section prices rapidly. Over the course of two months, as flat rolled prices in that region continued to rise, mills passed large increases on to tubing, upping prices approximately $5.00 cwt. ($110 /mt or $100 /nt). At this time however, prices have remained at a stable level with not much more room to increase. As market players do not expect another large increase, a smaller increase may occur in the near future. Therefore, the pricing trend is now slightly up. Hollow sections offers from Turkey are still ranging from $37.00 cwt. to $38.50 cwt. ($816 /mt to $849 /mt or $740 /nt to $770 /nt) for FOB, loaded truck, US Gulf Coast ports. In the US, demand is decent and is expected to improve as the weather warms up. Structural sizes are more commonly sought out due to the strong industrial and non-residential construction markets. Ornamental sizes are not as popular as residential housing projects are on hold. Raw material costs are rising in the US as well and have boosted hollow section prices up some. Scrap prices are increasing, pushing flat rolled prices up, which in turn have driven tubing (sizes 4” and larger) prices up $30 /nt ($1.50 cwt. or $53 /mt). With the market relatively strong and raw material costs on the rise, it is expected that smaller sizes will follow the trend and increase as well. Domestic hollow section prices are now in the range of $39.50 cwt. to $41.50 cwt. ($871 /mt to $915 /mt or $790 /nt to $830 /nt) for A500 grade A and grade B hollow sections up to 6” in the Midwest region. The domestic pricing trend is slightly up, and prices are expected to increase again in the near future.