Just one month removed from a failed attempt at an October price hike, US domestic hollow structural section (HSS) tubing mills are now offering at below September price levels; furthermore, actual spot transactions reflect significant discounts.
Most domestic mills have reduced their offers by approximately $1.00 cwt. ($22 /mt or $20 /nt) since our last report two weeks ago, and are now offering HSS tubing for around $36.50 cwt. to $37.50 cwt. ($805 /mt to $827 /mt or $730 /nt to $775 /nt) ex-mill. However, most spot deals are ultimately concluded at significantly below this range, at roughly around $34.00 cwt. ($750 /mt or $680 /nt) depending on mill and the size of the order. Nevertheless, distributors say that the price is not particularly relevant anyway because most people do not need to buy and are not interested in purchasing at any price.
Moving forward, US tubing producers are likely to allow prices to slip even further over the remainder of the year. With the flat rolled market and scrap prices expected to continue declining, tubing mills will not have any firm ground to stand on, price-wise. Another $2.00 cwt. ($44 /mt or $40 /nt) decrease over the next month is a likely scenario.
While demand is lethargic on the domestic side, traders have informed SteelOrbis that the demand for offshore tubing is basically nonexistent. US demand for tubing is just too low due to the stall in construction projects and domestic offers are too aggressive for imports to compete with.
The only offshore offers traders have seen recently for HSS tubing to the US have come from Japan. However, while Japanese offers spiked in interest just two weeks ago, their aggressiveness has worn off and traders have pretty much turned off their radar. Meanwhile, Korean offers were more prevalent last month, but have since gone quiet.
Mexican HSS tubing offers appear to be, for all intents and purposes, the only legitimate import option. Mexican offers have mostly trended neutral over the past two weeks and continue to range from $36.50 cwt. to $38.00 cwt. ($805 /mt to $838 /mt or $730 /nt to $760 /nt) delivered to Southern California and at about $34.00 cwt to $35.00 cwt. ($750 /mt to $772/ mt or $680 /nt to $700 /nt) delivered to Houston. Larger customers may be able to negotiate a small discount depending on order size and specifics.
Preliminary license data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that total import tonnage of structural pipe and tube decreased for the third consecutive month in October, falling from 17,406 mt (preliminary census data) in September to 15,015 mt. October's pipe and tube imported tonnage is less than half the 30,498 mt recorded a year ago in October 2008. For the second consecutive month, only Canada, at 9,820 mt, and Mexico, at 3,509 mt exported more than 1,000 mt to the US in October.