Despite recent domestic price increase announcements over the past week on most longs products, US hollow structural section (HSS) prices decreased further late last week.
US domestic HSS prices have declined by about $2.00 cwt. ($44 /mt or $40 /nt) since our last report two weeks ago, and can now mostly be found within the range of $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". While domestic mills are expected to keep prices relatively firm within this range for the time being, customers may still be able to negotiate better prices depending on order size and specifics.
Many distributors believe that prices have just about bottomed out, but again, there may still be room for another slight domestic price decrease prior to any established increases, mostly due to the large gap of about $10.00 cwt. ($220 /mt or $200 /nt) that still exists between tubing and hot rolled coil (HRC) prices and the fact that tubing demand is still extremely lethargic.
Statistics from the most recent Metal Service Center Institute (MSCI)'s monthly shipment and inventory report demonstrate that pipe and tubing inventories declined slightly from March to April, from about 712,000 nt in March to 708,000 nt in April; however, daily shipments and monthly shipments also declined from March to April, at 8,500 nt and 8,200 nt respectively for daily shipments and about 187,000 nt and 180,000 nt respectively for monthly shipments. So, despite fewer inventories, the average service center inventory overhang of pipe and tubing actually increased slightly from March to April, from an estimated 3.8 months to 3.9 months.
Nonetheless, many distributors have expressed that while bookings have not necessarily increased, they have received more inquiries recently and are more optimistic about the near future of the market than they were at this time last month, and will be even more optimistic if scrap pricing continues its upward trend. Unfortunately, the same cannot really be said for import traders.
Tubing imports to the US have been steadily declining throughout the year. Traders are seemingly almost out of options, as one trader told SteelOrbis, "I'm not even turning an eye to Mexico anymore. I've been buying domestically; it's the only thing that makes sense."
Mexico, which had been the primary tubing importer to the US over the past couple months, hasn't seen much booking activity from the US over the past few weeks, as Mexican mills' offers remain at around $27.00 cwt. ($595 /mt or $540 /nt) delivered to customers in Texas and California. While Mexican mills may still be willing to negotiate pricing for certain orders, their aggressiveness is nowhere near what it was earlier in the year. Domestic mills have lowered prices too far and remain too aggressive to make sense for many buyers to consider import product, unless it is a specialty item.
Furthermore, Korean and Turkish tubing offers to the US, which had been competitive earlier in the year, have been pretty much priced out of the market, and will most likely be uncompetitive on offers to the US until US domestic mills begin to raise prices again.