The US domestic hollow structural section (HSS) market hasn't seen much positive activity over the past couple of weeks since our last report, and while official prices did not decrease for the first time in over a month, they remain soft, with a strong likelihood of further decreases within the next month.
Many tubing distributors have informed SteelOrbis that their main objective in this market remains keeping inventory levels as low as possible to cope with the lack of orders and keep costs low, especially because they know they will be able to get quick orders from domestic mills if necessary.
However, keeping inventory levels low continues to be an issue, especially for the majority of US service centers. According to the most recent Metal Service Center Institute (MSCI) monthly shipment and inventory report, pipe and tubing inventory overhang in February was the highest it has been in over two years, at approximately 4.3 months at current shipping rates, and daily tonnage shipments totaled only about 8,700 nt in February, which was the second lowest, only to December 2008, daily shipment month in at least two years.
While official domestic HSS prices at the mill level can still most likely be found in the approximate range of $34.50 cwt. to $35.50 cwt. ($761 /mt to $783 /mt or $690 /nt to $710 /nt) for A500 grade A and grade B hollow sections up to 6" ex-mill in the Midwest, the continued lack of demand has softened this range in recent weeks, and customers may be able to negotiate quick orders of significant tonnage at or even below $34.00 cwt. ($750 /mt or $680 /nt).
Nonetheless, there is still some local activity amongst service centers and distributors transpiring, as some have finally been able to get rid of their old products from 2008, albeit at a loss. However, small contracts here and there probably will not be enough to stabilize prices moving forward, and domestic mills could decrease offers by about another $1.00 cwt. ($22 /mt or $22 /nt) or more over the next few weeks.
On the import side, sources offering tubing to the US continue to find bookings to the US to be very few and far in between, mostly due to the long lead times and aggressive US domestic mills who refuse to lose any potential business in this market. Despite a few foreign mills still attempting to offer tubing to the US, Mexico appears to be the only current source with any legitimate chance at booking.
Even though the price range for most HSS tubing offers from Mexico to the US has remained unchanged from two weeks ago, at $37.00 cwt. to $38.00 cwt. ($816 /mt to $838 /mt or $740 /nt to $760 /nt) delivered to Texas and California, SteelOrbis has learned that Mexican tubing offers can be found for as low as $36.50 ($805 /mt or $730 /nt), and perhaps even lower depending on order size and specifications.
Meanwhile, South Korean tubing offers have also remained unchanged from two weeks ago, and are still at approximately $37.00 cwt. to $38.00 cwt. ($816 /mt to $838 /mt or $740 /nt to $760 /nt) duty-paid, FOB loaded truck in West Coast ports. Most South Korean offers can also be negotiated, but most traders will not even bother, considering that they can probably get better pricing and definitely get quicker orders from Mexico if necessary.
Turkey also continues to try and offer tubing to the US, but producers find themselves in a similar predicament as South Korea, not being able to overcome long lead times and aggressive US domestic mills. And while most Turkish long products experienced a slight up-tick in pricing over the past week, Turkish flat rolled products continue to trend slightly down. Nonetheless, most Turkish tubing offers have not changed from two weeks ago and remain in the general range of $35.00 cwt. to $36.00 cwt. ($772 /mt to $794 /mt or $700 /nt to $720 /nt) FOB loaded truck, US Gulf Coast ports.
Furthermore, preliminary licensing data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that total import tonnage of structural pipe and tube decreased from January at 28,208 mt, to February at 23,573 mt, which is also about 38 percent less than the 37,731 mt imported in February 2008.