Most US pipe mills have increased their welded standard and line pipe offers by another $2.00 cwt. to $2.50 cwt. ($44/mt to $55/mt or $40/nt to $5 /nt) for September shipments this week as a result of continued up-ticks in the scrap and flat rolled coil markets. However, unlike most of the flat rolled market, domestic pipe activity remains relatively dormant.
The domestic pipe market has followed a similar trajectory in recent months as the US hollow structural section (HSS) tubing market, with prices increasing along with flat rolled, despite a continued lull in demand and activity. While pipe and tube prices may continue to climb along with flat rolled into October, these products may experience a slight fall-back in prices towards the end of the year if demand remains flat. And with only very slight improvement, at best, expected for US residential and commercial construction for the balance of the year, a demand revival for US pipe seems unlikely. Government construction spending, which has been inching up since February, is expected to give US pipe demand at least a minor boost in the second half of the year, however.
Meanwhile, pipe inventories are slowly shrinking at the distributor level. According to the most recent Metal Service Center Institute (MSCI) monthly shipment and inventory report, monthly US pipe and tubing service center shipments improved from May to June, from 171,000 nt to 183,000 nt respectively, while monthly inventory levels decreased from 662,000 nt in May to 632,000 nt in June, thereby decreasing the average monthly inventory overhang from approximately 3.9 months in May to 3.5 months in June. Nevertheless, pipe inventory levels on the customer level and at the ports remain high, as the market has yet to fully recover from the fallout from when the over-inflated US pipe market bubble burst late last year.
On the import side, while traders report that activity for most products has increased slightly over the past couple weeks, overall bookings for import pipe remain depressed. Meanwhile, other world markets, particularly in the Far East, have also been experiencing a price up-tick. Electric resistance welded (ERW) standard black plain end (BPE) pipe offers from India have increased, on average, by about $3.00 cwt. ($66 /mt or $60 /nt) since last report two weeks ago, mostly due to skyrocketing domestic Indian hot rolled coil (HRC) prices, bringing most offers to an approximate range of $38.00 cwt. to $39.50 ($838 /mt to $871 /mt or $760 /nt to $790 /nt) duty-paid, FOB loaded truck in US Gulf ports.
Meanwhile, Indian ERW ASTM A53 galvanized plain end (GPE) standard pipe offers increased more modestly by approximately $1.00 cwt. ($22 /mt or $20 /nt) since our last report and most offers can now be found for around $42.00 cwt. to $43.00 cwt. ($926 /mt to $948 mt or $840 /nt to $860 /nt) duty-paid, FOB loaded truck in US Gulf ports. Traders have mentioned that both BPE and GPE offers from India are priced way out of the market and it appears that they are content to wait for US domestic offers to keep increasing to levels where Indian imports can find some penetration again.
Perhaps the most aggressive import pipe offers right now are API X42 ERW line from Korea, offered at around $35.00 cwt. to $36.00 cwt. ($772 /mt to $794 /mt or $700 /mt to $720 /nt) duty-paid, FOB loaded truck in West Coast ports. Still, there appears to be no real urgency to book any import pipe product.
Licensing data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that total monthly import tonnage of structural pipe and tube decreased in July, to 16,544 mt, after registering its first increase since January, in June. Canada and Mexico have remained the top two exporters of tubing and pipe tonnage to the US since January, with 11,156 mt and 3,634 mt respectively in July.