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 theres 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 wasnt 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 increases 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 were
seeing today isnt 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
its unlikely buyers would load up on tubing at any