The US domestic tubing market is exhibiting a downward trend as prices have softened in recent weeks and are expected to slide even further going forward.
Domestic spot prices for hollow structural sections (HSS) have slipped in the last week and are now a couple of dollars short of the official published prices from mills. Current spot prices for domestic HSS now range from $69.00 cwt. to $70.00 cwt. ($1,521 /mt to $1,543 /mt or $1,380 /nt to $1,400 /nt) for A500 grade A and grade B hollow sections up to 6” ex-mill. The prices have softened $2.00 cwt. ($44 /mt or $40 /nt) on average since our last report two weeks ago.
HSS consumers report that the market is soft and demand has been weakening. There is plenty of availability at the mill and service center level, as customers are not buying much. The lack of demand from end-use markets is a big reason customers aren’t buying, but also, with expectations that prices will continue to decrease, no one is interested in making a large purchase unless, of course, they absolutely need to.
With this dynamic, buyers say that deals can be made at the mill level, especially on large tonnage orders, and with the right inquiry, tons can be purchased for less than $69.00 cwt. ($1,521 /mt or $1,380 /nt).
Going forward, more price softening is expected. With weak demand and the plummeting busheling scrap prices, tubing mills are likely to lower their prices. Some buyers are suggesting that even if flat rolled mills decide to keep prices stable, tubers may still decrease their prices to initiate some buying activity. Just last month, domestic tubing mills were forced to rescind an initial $60 /nt ($3.00 cwt. or $66 /mt) increase they attempted to push through due to the lack of acceptance.
The market is facing a low point when compared to the booming first and second quarters of 2008; however, prices are still very close to historical highs, and demand is not awful. As we approach the fourth quarter, it’s typical to experience some down times, but market players are still optimistic for the next year.
We may begin seeing some imports arriving to the US in the first quarter of 2009, as the US dollar has been gaining some strength and offshore offers have been softening.
In Turkey, flat rolled prices have been on a stiff decline recently, giving chances to tubing mills to extend their competitive numbers. Turkish offerings for HSS have decreased by approximately $3.00 cwt. ($66 /mt or $60 /nt) in the last two weeks and are expected to fall further.
Turkish offers are now in the range of $61.00 cwt. to $63.00 cwt. ($1,345 /mt to $1,389 /mt or $1,220 /nt to $1,260 /nt) FOB loaded truck US Gulf ports.
Prices from China have also declined, perhaps to more competitive levels than those from other sources. However, the Chinese structural tubing quality issues seen last year have not yet been forgotten and Chinese tube imports have diminished greatly since the beginning of 2008.
Data from the US Import Administration show a significant decline in import tonnage of structural pipe and tube in the US when comparing July and August 2007 with July and August 2008. While July and August 2007 census data totaled 115,836 mt, the same months in 2008 only show 81,210 mt. (August 2008 is license data).
