US tubing producers announced an estimated $6.00 cwt. ($132 /mt or $120 /nt) price hikes since mid-June, but while flat rolled coil prices are poised to continue their upward climb, the tubing market may have started to show serious resistance.
After increasing by approximately $3.00 cwt. ($66 /mt or $60 /nt) since our last report in mid-July, current domestic listed prices for hollow structural section (HSS) tubing are now at approximately $37.00 cwt. to $38.50 cwt. ($816 /mt to $849 /mt or $740 /nt to $770 /nt) ex-mill, for ASTM A500 Grade A and B, up to 6". However, while flat rolled coil spot prices are, for the most part, keeping pace with published prices, spot offers in the US tubing market have lost their momentum. Most domestic tubing spot offers are being seen for about $1.00 cwt. to $2.00 cwt. ($22/ mt to $44 mt or $20 /nt to $40 /nt) below listed prices and even though mills will try to hold steady and firm, they remain hungry and many may give in and offer more significant discounts on sizable orders.
Furthermore, US Steel's announcement of a $1.50 cwt. ($33 /mt or $30) price increase on October flat rolled shipments may not trickle down to the tubing market this time. While domestic tubing mills will undoubtedly explore all possibilities of an October increase, demand hasn't improved enough and tubing inventories are still heavy. In fact, some distributors are worried that customers may begin to hold off buying until next year, to eliminate the risk getting stuck with more tonnage at tax time, if prices keep increasing.
Moreover, according to the most recent Metal Service Center Institute (MSCI) monthly shipment and inventory report, based on service center shipment levels, US pipe and tubing inventories had an overhang of about 3.5 months at the end of June, which is an improvement from the 3.9 months of average overhang in April and May, but is a far cry from the 2.1 months of flat rolled inventory overhang in June.
Nonetheless, as scrap pricing goes, so does the pricing of most steel products. And scrap is expected to register another, albeit more modest increase this month. So, if domestic mills do raise October prices, it will most likely be for $1.00 cwt. ($22 /mt or $20 /nt) or less.
Meanwhile, on the import side, the market remains very depressed and traders have continued to focus more on trying to find some domestic deals than chase import offers. There is no demand, prices are not competitive, and the market is too volatile for most buyers to invest in with long lead times. Nevertheless, traders are still keeping their eyes on any import offers that may surface. The most recent offer SteelOrbis was informed of this past week was HSS tubing from Korea at around $33.00 cwt. to $34.00 cwt. ($728 /mt to $750 /mt or $660 /nt to $680 /nt) duty-paid, FOB loaded truck in West Coast ports. The offer was not competitive to domestic offers to be considered.