Tioga Market Insights : Keeping you informed and up to date on industry market changes
May 15, 2018

Steel prices and freight costs continue to rise while lead times & price validity stabilize, but only temporarily. The most current update is certain to change as Section 232 & other drivers become clearer.

See details below.
Quick Update

  1. Everyone in the industry is anxiously awaiting the June 1 deadline (extended from May 1) for more clarity from the US Government on 232 exclusions... or not.
  2. To date after more than 3 weeks after Japanese PM Abe's visit with Trump in Florida, there is no update on US-Japanese ongoing trade negotiations.
  3. The price of oil has recently surpassed $70/Barrel.
Current Pricing, Lead Times, and Validity

Rising tides as price increases continue.
  • Update: Productos Tubulares of Spain (PT) went back to work last week; the strike is over.
  • Update: Price increases continue; as an example, last week Vallourec raised their pricing on domestic and import (Brazil) carbon seamless pipe by 6%.
  • Update: Add freight into the mix as flatbeds have become scarcer and the pricing has gone up 20% or more over the last few months. This pricing level is projected to continue throughout the summer. LTL rates have been impacted as well and have increased.

April Recap:
  • Over the last year and a half, the worldwide market came out of the bottom of the pricing curve and prices started to increase. Carbon A106 is up 35%, A53 is up 27%, Chrome is up 3%-5%, and Stainless is up 5%-10% on average.
  • There is no way to gauge the pricing effect from the 232 rulings and the potential 301 investigation. Long products have been increased but it is all over the map. Once this all pans out (unknown when for sure) then we will be in a much better position to truly capture what the effect will be on the market.
  • The stainless flange anti-dumping has influenced pricing as they have increased but at varying levels depending on the source.
  • The other anti-dumping suits listed have yet to have a visible effect on pricing.
  • Due to the 232 rulings and that many countries are negotiating at this time, major steel manufacturers around the world will not even quote at this time.
  • Productos Tubulares of Spain (PT), a major global chrome pipe manufacturer, labor force is on strike and has been for over a month. It is unknown when they will get back to work.

Lead Times & Pricing Validity
Temporarily stable, but for the very short term
  • Update: Lead times and validities have settled down and are now stable for the time being. This could/will change based on the final outcomes of the 232 tariffs in June of 2018.

April Recap:
  • With all that has been happening (pricing increases) along with the current state of the market, lead times are now going out to as much as ten months ex-mill. With demand slightly up ticking in the oil and gas side of things along with China closing excess capacity over the last two years, this has led to longer lead times for steel products.
  • Pricing validity from around the world has quickly dropped from up to a month down to a day in a good amount of cases. There is just too much chaos in the market for the manufacturers to risk selling at below market price.
Details Behind the Market Drivers
Section 232 Update

Section 232. In the world of pipe, clarity between Exempted Countries, Temporarily Exempt Countries, and Non-Exempt Countries is unfolding, but far from settled.

Pipe only , Fittings & Flanges are not currently covered.

Exempted Countries
  • Update: We now have a Korean carbon welded line pipe mill telling us that they have used up their allocation for the year. This could lead to spot shortages of this material later this year. Also, the Korean 70% is retroactive to January 1st, 2018. Brazil has come out and agreed to a 70% cap as well but that has not been finalized yet.
  • Argentina – The country agreed to limit exports of steel products to the US to 180,000 tons per year, based on the average of steel exports during the past three years plus an additional 35%.

April Recap:
  • South Korea – made a deal to open their car market to USA car mfg’s. Thus, they will not be under the 25% tariff. But they will be under a 70% maximum of the last three years average imported weight into the US. Update: South Korea’s 70% cap is now retroactive to Jan. 1st, 2018.

Temporarily Exempt Countries
  • Update: The deadline has been moved until June 1st, 2018. White House Trade Adviser Peter Navarro told steel industry executives late on Tuesday, via Reuters, the US officials are considering quotas and “other restrictions” on steel and aluminum imports. This came after the White House announced an extension of tariff exemptions for Canada, Mexico and the European Union (EU) until June 1. Navarro noted: “We will have quotas and other restrictions to make sure that we defend our industries in the interest of national security.”

April Recap:
  • Australia, Canada, Brazil, Mexico, and the European Union Countries – These countries have until May 1st, 2018 to negotiate better trade deals or be hit with the tariffs.

Non-Exempt Countries
April Recap:
  • The rest of the world – Negotiations with some of these countries continues but these countries are currently subject to a 25% import tariff into the US as of March 23rd, 2018. On Tuesday April 9th, China announced that they will reduce their tariffs on imported automobiles in a sign that they are willing to negotiate down their tariff level.
Section 301 Update

Section 301. New proposal additional 25% tariffs on steel from China.

Targets Chinese Industries including steel products.

April Recap:
On April 4th, 2018 the Office of the US Trade Representative proposed 25% tariffs on various goods from China. The proposed tariffs are in addition to any import duties and fees already in place. This means that any steel products that fall under 232 already would be subject to additional tariffs.
These are proposed tariffs and are not in effect currently. A public hearing will be held in Washington, DC by the International Trade Commission.
Anti-Dumping & Countervailing Duties Update

Anti-Dumping & Countervailing Duties: Indian stainless flanges in jeopardy of being shut out of USA market.

Stainless Flanges
April Recap:
  • The anti-dumping is still open since some of the Indian companies did not provide the government all of the requested information. When they do they will be hit with a much higher% than the current 20+%. This will effectively shut down Indian stainless flanges into the USA along with the Chinese.
  • Final issuance (and any potential changes) are due by July 26th.
Carbon A105 Forged Fittings: Investigation against Chinese, Bothwell, & Mega decision May 29th, 2018.

Carbon A105 Forged Fittings Investigation
April Recap:
  • In October of 2017 Bonney Forged filed an anti-dumping case against China, Taiwan (Bothwell), and Italy (Mega). The estimated dumping margins alleged by the petitioners are 142.72 percent for China, 18.66 to 80.20 percent for Italy, and 116.17 percent for Taiwan. A final determination at this point is scheduled for May 29th, 2018.
As the market continues to experience multiple level changes, we will do our best to keep you informed and share industry updates as they become available.

Donald W. Carver
Sr. VP | Director of Global Sales
1301 Riverfront Parkway, Suite 108, Chattanooga, TN 37402
dcarver@tiogapipe.com | www.tiogapipe.com
Please note that the views expressed here are for informational purposes only and acquired from various sources & while it is accurate and true to our knowledge, there may be omissions, errors or mistakes so one should not accept it as purchasing advice.
We value your opinion.
If you could take a moment to answer this 1-question survey, it would help us develop better products for you in the future!