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Steel pipe tags rise despite year-end doldrums

Keywords: Tags  steel tube, steel pipe, HSS, energy tubulars, agriculture, automotive, energy, energy tubulars trade petition

CHICAGO — Steel pipe and tube market activity has slowed as the traditional year-end doldrums have kicked in, leaving market players scratching their heads about what 2013 might bring.

Opinion is divided, with respondents to a recent AMM survey describing the state of the market as "poor," "fair" or "good" in roughly equal measures. Still, some two-thirds of respondents said that they expect prices to remain where they are next year, with the balance expecting slight increases.

One pipe mill respondent said that most of the sheet price increases announced over the last two months have been holding, bolstering tags despite lackluster demand.

But another pipe mill source said that his company had been able to secure some of the cheapest prices for coil—the substrate for pipe and tube—that it had seen in about five years. "Price increase are negotiable," the source said. "They’re not really holding, and deals are being made."

With coil costs rising for most pipe mills, most market sources reported slightly higher prices for tubular products such as hollow structural sections (HSS) this month. AMM’s December price for HSS rose to $940 per ton ($47 per hundredweight), up 1.6 percent from $925 per ton ($46.25 per cwt) in November but off 2.1 percent from $960 per ton ($48 per cwt) in December 2011.

For most pipe and tube products, market sources reported flat to slightly higher prices in December over November, although sources quoted a wide range of prices. Despite the overall consensus that prices were steady or strengthening, a handful of players nonetheless insisted that tags were falling, especially for products such as imported line pipe.

The lack of clarity in pricing trends comes at a time when most sources report that activity has tapered off across the board as the winter holidays approach. According to sources, many customers are putting off purchases until next year or looking to liquidate inventory ahead of year-end taxes in some regions.

"People are just sitting on their hands waiting for some demand," one service center source said. "Ag(riculture) and automotive are OK. Construction is slightly better, but still terrible."

He said what worried him most going into 2013 was not demand from those markets so much as factors beyond his company’s control, such as economic troubles in Europe and China and the potential impact of new tax policies in the United States.

A pipe and tube distributor said that his firm had experienced a better December this year than last, but he chalked that up mostly to luck. He added that he was concerned about uncertainty in 2013. "Every year, we poll our customers to see what they think the next year will look like," he said. "For the first time I can remember, no one really seems to have a clear idea. I don’t think it’s going to be a great year, but I don’t think we’re going to fall off a cliff either. We’ll see."

Some sources in the energy tubulars sector were more pessimistic, noting that increased global tubular capacity has made it increasingly difficult to maintain healthy margins.

On the trade front, questions remain about whether domestic mills might bring a trade petition against overseas energy tubular producers in early 2013.

One trader said that some domestic mills had become very aggressive in looking to match even low-priced imported product, leaving little incentive for customers to buy overseas material. "Nobody is really buying," he said. "Everything is just at a standstill."

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