For the second time within the past month, US domestic hollow structural section (HSS) tubing mills reduced their offer prices to customers. Subsequently, spot prices have fallen further. However, domestic offers are likely close to bottoming out.
Most domestic mills have reduced their HSS tubing offers by approximately $1.00 cwt. ($22/mt or 20/nt) since our last report two weeks ago, and most offers are now mostly ranging from around $34.50 cwt. to $35.50 cwt. ($761/mt to $783/mt or $690/nt to $710/nt) ex-mill . However, actual spot transactions on deals involving significant tonnage have fallen even further, to as low as $33.00 cwt. ($728/mt or $660/nt) ex-mill.
Looking forward, despite demand currently remaining low, some distributors believe that domestic mills will be able to hold prices relatively firm throughout the rest of the year if predictions that flat rolled coil prices have just about hit the bottom this year are correct. Although HRC remains the weakest flat rolled product, prices are thought to be at or near the bottom due primarily to a recent uptick in the scrap price trend. Furthermore, US flat rolled prices face very little pressure from imports. However, on the other hand, many distributors claim that tubing prices are predominately driven by supply at this point, and while flat rolled coil prices are an important indicator of tubing pricing, there are too many tubing mills in the US supplying to too little demand, and this could result in tubing prices remaining soft until the construction season picks up next spring.
Meanwhile, competitive offshore HSS tubing offers to the US have all but dried up over the past month. Traders suggest that there may still be an occasional offer from Japan or Korea; however, prices are not where they were a month ago, and the numbers just don't make sense for anyone to seriously consider booking. That leaves Mexico as the primary HSS tubing supplier to the US. Mexican mills have also demonstrated a little more aggressiveness, decreasing offers by approximately $2.00 cwt. ($44/mt or $40/nt) over the past couple weeks. As a result, the majority of HSS tubing offers from Mexico are currently ranging from about $34.50 cwt. to $36.00 cwt. ($761/mt to $794/mt or $690/nt to $720/nt) delivered to Southern California and at about $32.00 cwt to $33.00 cwt. ($750 /mt to $772/ mt or $680 /nt to $700 /nt) delivered to Houston.
Preliminary license data from the US Steel Import Monitoring and Analysis System (SIMA) demonstrate that total import tonnage of structural pipe and tube decreased for the third consecutive month in October, falling from 17,406 mt (final census data) in September to 16,147 mt. October's pipe and tube imported tonnage is less than half the 30,498 mt recorded a year ago in October 2008. For the second consecutive month, only Canada, at 10,884 mt, and Mexico, at 3,518 mt exported more than 1,000 mt to the US in October.