US Structural Tubing Prices Hold Steady After Mill Increases

- Feb 04, 2019-

Buyers said they were unfazed by the mills' increase announcements because substrate prices continue to decline and demand has yet to show a strong uptick.

At the same time, the mills attempted to enforce the price rise. Prior to the increase, steelmakers had 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.

At least six tube mills - led by Nucor Tubular - raised their prices for hollow structural sections (HSS) by $40 per ton ($2 per hundredweight) this past week.

 "It's more of a trial balloon, and first they want to see if the hot-roll increase sticks... There is still general weakness in the tubing market,” a Midwest 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 cwt) fob mill on Thursday January 31. 

One northeastern tube buyer reported placing two orders with a mill over the past week - one before and one after the price hikes had been announced.

“They are enforcing [the increase],” he told Fastmarkets, indicating that the second truckload he ordered was priced $40-per-ton higher than one booked on January 28.

"All I will tell you is we have a huge backlog and took all our price sheets up. [We] plan to wait it out and see what happens," a mill source said.

Notably, before the pricing letters were sent out, certain mills reportedly had cut their selling prices by $40 per ton, putting HSS at $980 per ton early this past week, sources told Fastmarkets. The subsequent $40-per-ton increases effectively returned prices to their earlier level, causing confusion among market participants.

“This took us all by surprise. First they decrease the price and then they send out the increase letter… The number came off before the increase. Distributors filled their holes at the lower number,” a northern distributor said.

Several US flat-rolled steelmakers also announced $40-per-ton price hikes in late January, although market sources speculated that the increases were intended to limit further price declines.

While some tubing market participants said it was too early to tell whether the HSS increase would stick, others were optimistic, indicating that low-priced deals for coil had vanished.

Fastmarkets AMM's daily hot-rolled coil index stood at $33.13 per cwt ($662.60 per ton) on January 31, off by 8.5% from $36.21 per cwt at the beginning of the year and down 27.7% from the 2018 peak at $45.84 per cwt.

Dom Yanchunas in New York contributed to this story.