LOS ANGELES — West Coast producers of structural steel tubing are sticking to a $40-per-ton increase even as buyers report a recent drop-off in demand in an already slow market.
In the two weeks or so since implementation, most day-to-day business still reflects a $40-per-ton hike over prices quoted in mid-August, before local increases came into effect, sources said. This would place core sizes of A500 Grade B hollow structural sections at about $980 per ton ($49 per hundredweight).
While some buyers contend that orders for multiple truckloads could easily trigger price cuts, they acknowledge that their purchases are being held to a minimum as few consumers take any more tons than necessary.
"The increase seems to be holding, but there’s still not a lot of confidence out there," one market source said, citing what he and others said was a slowdown in consumer buying over the past few weeks.
Ironically, this cautious outlook might be helping to prop up the increase, some market observers said. They noted that confidence has been so low this summer that there wasn’t much of an uptick in orders early this month in anticipation of the tubing increase. In contrast, some recent hikes on flat-rolled steel and other structural products spurred at least a measure of hedging.
It remains far from clear whether the increase’s apparent success has created a foundation for a second round of hikes to bring Western mills in line with tubers east of the Rockies.
"I think that before we see another increase, people must be convinced that what we’re seeing today isn’t going to last until the end of the year," a distributor said of the current slowdown.
Although a number of distributors insist their tubing inventories contain little surplus tonnage prone to discounting pressures, others believe that West Coast warehouses have enough imported tubing to threaten the success of an additional domestic hike.
Offers for South Korean tubing slated for fourth-quarter shipment have been reported as low $41 to $42 per cwt, although some market sources argue that it’s unlikely buyers would load up on tubing at any price.