US Structural Tubing Prices Flat; Buyers Halt

- Feb 04, 2019-

Buyers said they expect additional discounting from the tube mills, and distributors may be forcing the issue. Still, the mills have been loath to cut their selling prices for rolled products that were made using hot-rolled coil that was procured when steel prices were much higher than now.

The cost of coil substrate has hit its lowest point in more than a year, according to Fastmarkets' pricing records. And the tubers' customers expect welded material to become cheaper very soon, too. 

"There's no sense in buying today if we're going to see a decrease," an East Coast distributor said. 

Fastmarkets AMM's weekly pricing assessment for US domestic A500 hollow structural sections was unchanged at $1,020-1,040 per ton ($51-52 per hundredweight) fob mill on Thursday January 24. 

Previously, the price had logged its second reduction of 2019 in the week to January 17. Mill sources have expressed frustration over the price drops, which narrow their profit margins with regard to the sharply higher hot-rolled coil prices seen in 2018.

"We’re trying to fight to hold on to prices that make any sense with where we got coil last," a mill source explained. "So we’ve got some high-priced inventory to chew through, and there will be a sting for a little while.”

Fastmarkets AMM's daily hot-rolled coil index dipped to $34 per cwt ($680 per ton) on Thursday, off by 6.7% from $36.46 per cwt one month earlier and down 25.8% from the 2018 peak at $45.84 per cwt.

In an effort to stem the declines, West Coast sheet mills California Steel Industries and USS-Posco Industries both announced a $40-per-ton ($2-per-cwt) price rise.

Market participants were immediately skeptical of the hikes.

"I really don't think that's a legitimate increase," the East Coast distributor commented. 

Among tubing market participants, there was wide agreement on Thursday that any subsequent price-increase announcements from the other domestic steelmakers would be baseless and would not be taken seriously downstream.

Lead times from the sheet mills have contracted to just three weeks. 

"I don't think flat-roll price increases will happen until the scrap price and [coil selling prices] start going up," a second tube mill source predicted. "Hopefully that will be sooner rather than later!"

Michael Cowden in Chicago contributed to this report.