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HSS hike hinges on flat-rolled price increase

Keywords: Tags  HSS, hollow structural sections, flat-rolled steel, prices, Atlas Tube, JMC Steel, American Tube Manufacturing, Welded Tube of Canada Southland Tube

NEW YORK — Whether recent hollow structural sections (HSS) price hikes will hold depends on the success of earlier flat-rolled steel increases, as there hasn’t been a noticeable pickup in demand, market sources told AMM.

"It’s not bad; it’s just not great," one mill source said of current demand, adding that the flat-rolled increases were the main reason for the hike.

"We need it with the flat-rolled going up," he added.

"They’re doing that because it lets them negotiate off a higher base," a trader said of the hikes. "But whether it really makes a difference in what the customer pays, in the transaction prices, that remains to be seen."

Atlas Tube Inc., a subsidiary of Chicago-based JMC Steel Group Inc., started the latest round of price increases with a $50-per-ton hike on HSS (, March 5). It was followed by American Tube Manufacturing Inc., Birmingham, Ala.; Southland Tube Inc., Birmingham, Ala.; Welded Tube of Canada Ltd., Concord, Ontario; Maruichi Leavitt Pipe & Tube LLC, Chicago; and Nova Tube Inc., Montreal, which announced hikes under roughly the same terms (, March 6).

Some were skeptical that the flat-rolled increases, and subsequently the HSS hike, would hold in full.

"I think the flat-rolled guys based this increase on their need to put a floor under eroding pricing, and it’s not based on any increased demand, which is OK," a Mid-Atlantic distributor source said. "But a flat-rolled price increase without demand and without a raw material increase behind it usually doesn’t stick and eventually will fall back."

However, any rise in scrap prices this month could buoy the hikes, the source added.

Early indications for bellwether markets in the Midwest were that prices might rise $30 to $40 per gross ton from the previous month, although little has been transacted (, March 5).

"Scrap seems to be wavering. If it only goes up $20, then from the $50 they might get $20," a distributor source in the Midwest said of scrap’s potential impact on the flat-rolled hikes.

There has been some indication of a pickup in residential construction recently, which might bode well for HSS demand later in the year.

"We’re going into the springtime, and housing is obviously quite a bit better," the trader said. "When housing picks up, nonres(idential construction) picks up six to nine months later than that. That’s where HSS goes. We’re not quite there yet."

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