The US domestic pricing trend for hollow structural sections (HSS) is pointing downwards as mills have rescinded their earlier price hikes and are willing to cut prices even further just to fill up their order books.
Demand for tubing products has fallen off quite a bit in recent months, resulting in less inquiries and orders on the service center level, which in turn, has been making it tough for mills to get orders. This lack of interest from buyers has pushed mills to cancel their $60 /nt price increase that was implemented in early August, and now buyers are saying that it is quite easy to strike deals with tubing mills at numbers below the published price.
Right now, the domestic published price for HSS ranges from $71.00 cwt. to $72.00 cwt. ($1565 /mt to $1,587 /mt or $1,420 /nt to $1,440 /nt) for A500 grade A and grade B hollow sections up to 6" in the Midwest regions. However, buyers indicate that mills are willing to negotiate and are accepting bids as low as $69.00 cwt. ($1,521 /mt or $1,380 /nt) for the right inquiry.
The domestic pricing trend is pointing downward and buyers predict that prices will fall further in the weeks to come. Scrap prices are decreasing drastically, and flat rolled prices have been on the decline as well. The weakening raw materials prices combined with the lack-luster demand is expected to push tubers to lower their numbers a few notches in the upcoming months. Also, import competition, though not a big factor now, is expected to grow in the short-term, which could also force domestic mills to lower their prices to keep their customer base.
Although there is not much traction on the import market at this time and few tons are making their way to the US, import offering prices have been decreasing, following the same trend as the US market. Also, the US dollar has been gaining strength, making imports more competitive. It is expected that import numbers will continue to trend down, which may cause a re-appearance of offshore material to US ports.
Data from the US Import Administration show a decreasing import trend for shipments of structural pipe and tube for the three-month span of June, July, and August 2008. In June, US ports saw 46,996 mt, while July showed 42,335 mt, and August showed 26,570 mt. In the months leading up to the end of the year, however, tonnage may increase as numbers have been coming down.
SteelOrbis has learned that due to decreasing flat rolled prices in Turkey, Turkish mills have lowered their tubing offers by another $2.00 cwt. ($44 /mt or $40 /nt) and are now offering HSS to US buyers in the range of $64.00 cwt. to $66.00 cwt. ($1,411 /mt to $1,455 /mt or $1,280 /nt to $1,320 /nt) FOB loaded truck in Houston. Deliveries are for late fourth quarter and prices are expected to continue to slide. However, at the current domestic price trend, the above import numbers do not represent an attractive buy for many service centers, because by the time the imports show up in December or January, the domestic prices may be at this level or even lower.