Despite continued sluggish demand, US tubing mills may try to stabilize, or even increase prices in the coming weeks, as result of domestic flats mills' recent price hike announcements.
After decreasing hollow structural section (HSS) prices by about $3.00 cwt. ($66 /mt or $60 /nt) throughout May, prices have trended neutral since our last report two weeks ago, with most offers continuing to range from about $29.50 cwt. to $30.50 cwt. ($650 /mt to $672 /mt or $590 /nt to $610 /nt) ex-mill, for ASTM A500 Grade A and B, up to 6". Even though prices have remained firm in the last two weeks and there are no immediate signs of further softening, customers are likely still able to negotiate better prices on large inquiries.
If the flat rolled mills are successful with their price increases, US tubing mills may be less likely to offer significant discounts and may attempt to increase prices for July This week, Nucor Sheet Mill Group led the rest of the major domestic flat rolled mills by announcing a minimum $30 /nt ($1.50 cwt. or $33 /mt) July increase on flats products, and seem to have established a floor price for hot rolled coils of about $400 /nt ($20.00 cwt. or $441 /nt).
While domestic tubing mills may not pull the trigger on a price hike just yet, as the gap between tubing and hot rolled coil (HRC) prices was a significant $10.00 cwt. ($220 /mt or $200 /nt) prior to the flat rolled price announcements, they are expected to do so if the flat rolled hikes seem to be sticking. However, some distributors believe that a tubing price hike would not stick due to the ongoing terrible demand levels. Statistics from the most recent Metal Service Center Institute (MSCI)'s monthly shipment and inventory report demonstrate that pipe and tubing inventory overhang was at approximately 3.9 months in April. Nonetheless, regardless of whether domestic tubing mills attempt to increase prices or not, it appears that the market has finally begun to, at least, stabilize.
On the other side, the importers of HSS continue to struggle, and unlike the domestic producers, traders see no immediate signs of improvement for imports. Other than Mexico, most traders openly admit that they haven't seen any offers from other foreign sources over the past couple weeks, and if they did, they know it would not be attractive enough worth considering. US tubing is a domestic market and is expected to remain so until prospective market conditions become clearer.
As stated, Mexico continues to be the only realistic import option for US tubing buyers. Most Mexican tubing import offers have trended relatively neutral over the past couple weeks, at around $27.00 cwt. ($595 /mt or $540 /nt) delivered to Texas and California; however, customers may still be able to negotiate prices below this range depending on size and order specifics.
Licensing data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that total import tonnage of structural pipe and tube continued its recent trend of monthly decreases in May, with 16,489 mt, from the 18,307 mt of imported structural pipe and tube in April. Canada and Mexico remained the two primary import sources of structural pipe and tube for the third consecutive month in May, at 10,043 mt and 3,003 mt respectively.