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 dont," a distributor in the South said.
"The markets been kind of slow. Its 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 didnt see the normal cycle at the beginning of the year as we did last year, so who knows whats 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 Februarys 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.