The pricing trend for domestic hollow sections is now strongly up, as SteelOrbis has heard prices are expected to take another upward leap early next week.
Domestic scrap prices are expected to creep up again come April, driving prices for flat rolled products steadily up. The US hot rolled coil prices have rebounded and prices have been gradually increasing, with a huge increase last month, with tube producers pushing those increases onto tubing. A few weeks ago, SteelOrbis reported a $1.50 cwt. ($33 /mt or $30 /nt) hollow sections increase for sizes 4" and up and the increase stuck. As market conditions continually grow stronger, and raw material costs increase, tubing prices are going to rise as well.
Currently, domestic hollow section prices are still at the level reported two weeks ago, ranging from $39.50 cwt. to $41.50 cwt. ($871 /mt to $915 /mt or $790 /nt to $830 /nt) for A500 grade A and grade B hollow sections up to 6" in the Midwest region.
Hollow section prices are expected to increase by at least $2.00 cwt. ($44 /mt or $40 /nt) to $2.50 cwt. ($55 /mt or $50 /nt) by next week and will then be in a higher range of $41.50 cwt. to $44.00 cwt. ($915 /mt to $970 /mt or $830 /nt to $880 /nt). Market players believe this price increase will stick since the demand is also strong enough to handle it.
Demand for structural tubing in the US is decently strong as large building projects are in the works. Spring has arrived, boosting up the construction markets, which in turn create a stronger demand for many structural steel products. Demand for ornamental sizes is still a little sluggish with the housing construction market in a slow spot. Steel service center inventories were said to be at a moderate level for all sizes of tubing.
Although a few steel service centers that SteelOrbis has spoken with said their tube inventories were at a moderate level, data from the Metals Service Center Institute (MSCI) shows otherwise. MSCI wrote in a press release dated March 19, 2007 that steel inventory liquidation, which began four or five months ago, is expected to continue into the second quarter. US steel inventories totaled 15.8 million nt at the end of February 2007, which was 18.2 percent more than the same time last year. Canadian steel product inventories totaled 1.24 million nt at the end of February, 20.1 percent higher than a year ago.
On the import side, hollow section prices from both China and Turkey have remained at a stable level, however the pricing trend is slightly up as there is still a little room to increase further.
Flat rolled prices in China were steadily rising, but have now stabilized for the time being. Mills did push some of the flat rolled increases onto tubing, as we saw prices increase two weeks ago for our last report. Now, however US inventories are relatively high and there is too much competition in the market for China to increase their hollow section prices any further. Chinese mills absorbed some of the flat rolled increases and are keeping tubing prices flat for now. However, the Chinese VAT rebate which may be reduced shortly can have a boosting effect on offers. Therefore, the pricing trend for imported square and rectangular tubing remains slightly up.
Chinese offers still range from $32.50 cwt to $34.00 cwt. ($717 /mt to $750 /mt or $650 /nt to $680 /nt) FOB West Coast, approximately $0.50 cwt. (11 /mt or $10 /nt) higher on the Gulf Coast. East Coast discharge is approximately another $0.50 cwt. ($11 /mt or $10 nt) higher than the Gulf Coast.
Turkish hollow section offers are still on the high side and are not accepted in the market. There are barely any Turkish offers out there right now, expect for a few bookings for odd sizes. Prices have remained flat and are still ranging from $37.00 cwt. to $38.50 cwt. ($816 /mt to $849 /mt or $740 /nt to $770 /nt) for FOB, loaded truck, US Gulf Coast ports.
License data from the United States Import Administration for structural pipe and tube shows for March 2007, worldwide imports to the US totaled 46,491 mt. The top three exporters to the US were Canada at 15,283 mt, China at 14,586 mt, and Korea at 5,580 mt. For mechanical tubing, worldwide imports to the US totaled 49,025 mt with the top three exporters to the US being Mexico at 12,248 mt, China at 11,356 mt, and Canada at 5,829 mt. The above represents data collected through March 28, 2007.