Following a $2.00 cwt. ($44 /mt or $40 /nt) price increase announced in late November for January shipments, domestic mills have pushed hollow sections prices up again by another $2.00 cwt., SteelOrbis has learned.
Raw material costs have been increasing regularly in recent months. Busheling scrap prices climbed up by approximately $40 per long ton in December and then saw a huge increase of $70 /long ton in January. Reacting to the skyrocketing scrap prices (and other factors), flat rolled producers have already upped their prices by more than $100 /nt in 2008, pushing transaction prices for hot rolled coils above $30 cwt. ($661 /mt or $600 /nt). US domestic tubing mills are also reacting to the price increase frenzy. To reflect the increasing raw material costs, tubing mills upped prices again, effective last week.
The first price increase of the New Year announced by tubers in late November was accepted in the market and pushed prices up to the level of $40.00 cwt. ($882 /mt or $800 /nt). Now with the additional $2.00 cwt. increase, domestic hollow section prices range from $42.00 cwt. to $43.00 cwt. ($926 /mt to $ 948 /mt or $840 /nt to $860 /nt) for A500 grade A and grade B hollow sections up to 6" in the Midwest regions. West Coast buyers have commented that the domestic price is slightly higher, with some prices even as high as $46.00 cwt. ($1,014 /mt or $920 /nt).
With prices going up so dramatically, one would think that demand is growing stronger by the day; however, that is not the case. Sources agree that demand is still stagnant and that these increases are strictly raw materials driven. That being said, it's hard to predict what will happen from here on out. The domestic pricing trend for hollow sections is highly dependent on what the raw materials and flat rolled market will do come February. Right now, January scrap prices are still a little unsettled, though February may bring stability to the scrap market. There very well could be more increases in sight, especially with the newly announced flat rolled price increase for March.
As domestic prices continue to soar, import offers may be looking more attractive to some buyers. Import offering prices are still on the high side, but if domestic numbers continue to rise, some imports may find a home again in the US market.
China has been gone from the US market for a couple months now, but new countries have been finding some acceptance here. There have been rumored talks with Malaysian mills, but so far, no concrete offers.
South Korea is now offering at reasonable numbers to the West Coast, at a range of $38.00 cwt. to $39.00 cwt. ($838 /mt to $860 /mt or $760 /nt to $780 /nt) FOB, loaded-truck, US West Coast ports for March arrivals.
Mexico has its usual offerings, which are priced slightly below the domestic numbers. Prices reported are approximately $40.00 cwt. ($882 /mt or $800 /nt) delivered to the West Coast. SteelOrbis heard offerings at slightly lower than $40.00 cwt. for deliveries in the Gulf region.
Flat rolled prices in Turkey are expected to increase significantly in the next few weeks, leaving Turkish tubing producers reluctant to offer to the US. Factoring in the increased raw material costs, Turkish hollow section offers should go up by $2.00 cwt. ($44 /mt or $40 /nt) from the numbers reported in our last analysis, issued two weeks ago. Including the $2.00 cwt. price increase, Turkish offers are now in the range of $41.00 cwt. to $42.50 cwt. ($904 /mt to $937 /mt or $820 /nt to $850 /nt) FOB, loaded-truck, US Gulf Coast ports.