LOS ANGELES Domestic steel coil prices may have "reached bottom," but cheaper raw material costs in other parts of the world continue to leave U.S. tubular producers at a disadvantage when it comes to competing with imports, Northwest Pipe Co.s top executive said.
President and chief executive officer Scott Montross said the Vancouver, Wash.-based producer of tubular products and water transmission pipe didnt see the same kind of first-quarter "runup" in coil prices that has characterized the market in recent years, and this has resulted in "significant downward pressure" on steel prices.
He noted that a major coil price index during the first quarter was more than $100 per ton below where it was during the same period last year and $180 per ton below where it was in the corresponding period of 2011.
As a result, it appears coil prices could be nearing a floor, he said, although that doesnt mean a recovery is in sight.
"I think theres going to be some continued pressure on coil" throughout the year, Montross said during the companys quarterly conference call.
But despite weak coil prices, domestic tubing producers might not fully benefit from reduced raw materials costs because U.S. coil prices are "still pretty high" when compared to the rest of the world, he said. Northwest Pipe and other tubular producers have complained about U.S. market share being captured by lower-priced pipe and tube imports for well over a year (amm.com, Aug. 8).
While its not unlikely that steel prices could improve "briefly" this year with such sectors as automotive showing strength, Montross said markets arent in place "structurally" to support a sustained upward move in hot-rolled band prices. Overall construction activity has picked up but continues to improve only slowly as nonresidential construction still lags, he said.