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Pipe distributors hope for flat-rolled cutback

Keywords: Tags  steel pipe, steel tube, pipe and tube distributors, MSCI, thorsten Schier

NEW YORK — Pipe and tube distributors say they would welcome a move by flat-rolled steelmakers to take capacity offline in order to prop up pricing for the substrate.

"Everybody’s hoping that some of the flat-rolled mills will take out some capacity," one Midwest distributor source said.

Flat-rolled steel distributors have been lamenting excess production capacity’s effect on pricing (, May 15).

A second Midwest distributor source said it was likely that flat-rolled mills would eventually take some production offline. "We might see some extended maintenance outages during the summer if (the market) doesn’t pick up," he said.

A move to cut flat-rolled capacity could bolster pricing for commodity pipe and tube products, which recently has been "aggressive not only on the buy side but on the sell side," according to the first distributor source.

On the demand front, distributors have reported little change from what so far has been a tepid year. "I don’t see anything super exciting going on. I would say it’s flat," the second distributor source said.

Such sentiment is despite a pickup in service center shipments in April, according to Metals Service Center Institute (MSCI) data.

U.S. distributors’ shipments of carbon tube and pipe totaled 236,900 tons last month, up 5.6 percent from March and 3 percent from a year earlier, according to the MSCI. U.S. distributors’ inventories at the end of April were equivalent to 3 months’ supply, down slightly from the previous month but up slightly from a year earlier.

Shipments by Canadian distributors totaled 58,500 tons in April, up 12.3 percent from the previous month and 3.2 percent higher than in April 2012. Inventories at the end of last month were equivalent to 2.4 months’ supply, down from 2.7 months’ supply at the end of March and 2.6 months’ supply a year earlier.

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