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Pipe, tube market still subdued, margins thin

Keywords: Tags  MSCI, pipe and tube, March shipments, inventories, Thorsten Schier

NEW YORK — Sentiment remains subdued in the pipe and tube market, with tepid demand and more-than-adequate stock levels leading to pressure on margins.

"(Market conditions) are weak. Business is weak and margins are being pressed because people have inventory. We all thought that we would have good business and we don’t," a distributor in the South said.

"The market’s been kind of slow. It’s been flat and nondescript, and people look for clear direction. With clear direction, people can make decisions," a mill source agreed.

The unusually slow start to the year has made forecasting the rest of the year challenging.

"We didn’t see the normal cycle at the beginning of the year as we did last year, so who knows what’s going to happen," the mill source said.

However, he remains hopeful of improvement in the second half of the year, a sentiment expressed by most large pipe and tube makers after lackluster first-quarter earnings.

One positive note has been the continued uptick of the Architectural Billings Index (ABI), an advance indicator of construction activity, the distributor in the South said.

U.S. distributors’ shipments of carbon tube and pipe in March underlined the poor market sentiment, falling 11.2 percent year on year to 224,000 tonnes from 252,700 tonnes in the same month last year, according to the latest figures from the Metals Service Center Institute (MSCI). The tally was also down 2.1 percent from February’s 219,800 tons.

First-quarter shipments of 685,600 tonnes fell 6.3 percent from 731,400 tonnes in the first three months of 2012.

U.S. distributors’ inventories for March were equivalent to 3 months’ supply, down from 3.1 months in February.

Shipments from Canadian distributors totaled 52,100 tonnes in March, up 23 percent year on year and 2.6 percent higher than February levels. Monthly inventories were at 2.6 months’ supply vs. 2.1 months’ supply a year earlier and 2.7 months’ supply in February, MSCI said.

Canadian centers’ shipments for the first quarter fell 17.1 percent year on year to 156,700 tonnes.

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