Posted on 22 Jan 2020
The primary pipe and tube category that Preston analyzes that is of interest to the Tube & Pipe Journal® readership is mechanical tubing. This category includes conduit, off-the-welder tubes with wall thickness less than 0.156 inch, hot-finished seamless, cold-drawn seamless, and drawn-over-mandrel products. The applications are broad, as is the manufacturing base.
This isn’t to exclude other tube and pipe products. Indeed, all pipe and tube products are significant contributors to the U.S. economy. In total this year, pipe and tube shipments from domestic mills will represent about 14 percent of steel manufactured in this country, which is similar to the amount used in auto manufacturing.
According to Bureau of Labor Statistics data, the durable goods manufacturing sector added 35,000 jobs in November on a seasonally adjusted basis. However, employment in motor vehicles and parts increased by 41,000 as striking United Auto Workers members returned to work at dozens of General Motors locations. In summary, the industry suffered a net loss of 6,000 jobs. The employment decline mainly was in the machinery manufacturing category, which lost more than 5,000 jobs. However, durable goods manufacturing employment in November 2019 was 8.06 million, up from 8.022 million a year earlier.
The November Manufacturing Report On Business, as published by the Institute for Supply Management (ISM), noted that the Purchasing Managers’ Index (PMI) continued to indicate contraction in November at 48.1%, which was down from 48.3% in October. The Index turned negative in August for the first time in 35 months and has been below 50, indicating contraction, in each of the subsequent months. The New Orders Index also indicated contraction in November at 47.2%, down from 49.1% in October.
November manufacturing reports from the five Federal Reserve districts that publish were modestly negative but indicated improved optimism. The New York Fed reported that new orders, shipments, and employment all increased slightly; the outlook into the first few months of 2020 remained “subdued.” The Dallas Fed reported a negative production index, and while it was the most negative, the index for future manufacturing remained positive. The Richmond Fed reported a decline in the composite index to -1 in November from 8 in October based on new orders and shipments. The Philadelphia Fed had the most positive report despite mixed movements among the components. Finally, the Kansas City Fed reported a continued modest decline in manufacturing due to weakness in durable goods production.
A common theme was improved optimism despite concerns about trade and tariffs, election upheaval, and skilled labor shortages.
Several price increases on flat steel products announced near the end of 2019 came too late to be reflected in this issue’s steel price index. Flooding at U. S. Steel’s Gary Works on November 27 took its three active blast furnaces offline. All were expected to be back up in early December.
Tenaris has issued layoff notices to employees at its Blytheville, Ark., pipe mill amid weakening demand for energy tubular steel products in the U.S. Iron ore pellet producer Cleveland-Cliffs has announced that it will buy AK Steel in a stock deal valued at about $1.1 billion.
Based on licenses, preliminary overall pipe and tube import market share in October 2019 decreased by about 2 percentage points from the September level and was at the lowest point in 2019. Import share was down by 7 percentage points from October 2018.
The International Trade Administration issued preliminary results in administrative reviews of a number of trade cases in late autumn. The antidumping duties (AD) and countervailing duties (CVD) will not change until the final determinations are issued. The cases include:
Hot rolled band & mechanical tube price index.
The same products from Korea–Dong-A Steel Co: 53.8%; HiSteel Co.: 40.40%; Kukje Steel Co.: 51.27%; several others: 43.91%.
The International Trade Administration has issued final determinations in AD and CVD cases of circular welded carbon steel pipes and tubes from Thailand and Turkey. For the Thai case, the rate changed to 5.15% and for the Turkish case, Borusan’s rate is 0.82% and Toscelik’s is 1.53%. Several other producers were assigned a rate of 1.18%. The monthly Preston Pipe & Tube Report maintains a Trade Case Scoreboard with all the company-specific rates.
Overall pipe and tube shipments for the sectors of the market that we cover declined in October 2019 by about 2% and were about 15% below the same period a year earlier. Compared to October 2018, domestic shipments and imports in October 2019 were down by about 7% and 33%, respectively. Imports continue to be affected by the Section 232 legislation.
According to data from the SteelBenchmarker, the price index for hot-rolled band (HRB) was 0.67 in October, down 0.68 in September and down from this cycle’s peak of 1.21. We expect the HRB price index to increase. Lower-priced HRB has made certain domestic pipe and tube products more competitive with imports, which is why overall import share has declined in recent reporting periods.
Source:The Fabricator
