Tube and pipe manufacturing continues to slacken despite pockets of good news.

Tube and Pipe in the U.S. Economy
The primary pipe and tube category that Preston Pipe 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. To put this into perspective, based on data researched by Preston, auto manufacturing will consume a similar amount of steel this year. While it is likely that some steel used for domestic pipe and tube production was imported, it is clear that pipe and tube products make a substantial contribution to the steel economy.

Manufacturing Performance
Durable goods manufacturing continues to weaken overall. According to Bureau of Labor Statistics data, the durable goods manufacturing sector lost 4,000 jobs on a seasonally adjusted basis in September, with the largest declines occurring in the machinery and transportation manufacturing categories. Some of this is attributable to the General Motors strike by 48,000 United Auto Workers members, which began Sept. 15 and ended Oct. 28. Total durable goods manufacturing employment in September was 8.065 million, up from 7.980 million a year ago.

The September Manufacturing Report On Business, published by the Institute for Supply Management (ISM), noted that the Purchasing Managers’ Index indicated contraction at 47.8 percent, which was down from 49.1 percent in August. The August reading was the first in 35 months to fall below 50, indicating contraction.

September manufacturing outlook reports from the five Federal Reserve districts that publish reports regularly were mixed. The Tenth District, based in Kansas City, Mo., had a negative composite index indicating contraction, but the index did improve since last month. The Fifth District (Richmond, Va.) was the most negative in the month, falling into contraction, while the remaining three districts represented by the New York Federal Reserve Bank, the Philadelphia Fed, and the Dallas Fed all indicated a continuing, yet slowing, expansion. All five districts noted that new orders and shipments had worsened since August.

There is continued talk of the weight of trade tensions on business investment decisions, but the situation appears to be improving. On Oct. 11 the Trump administration struck a deal with China to delay additional U.S. tariffs in return for Chinese purchases of American agricultural products. We believe that a broader trade deal is likely to be reached sometime before the 2020 election.

Domestic Pipe, Tube, and Steel Mill News
U. S. Steel Corp. purchased a minority share of Big River Steel, which currently is undergoing an expansion. The company has said that this investment provides access to the latest in flat-rolled steel-making technology. Under the terms of the agreement, U. S. Steel has four years to purchase the remaining shares. Investments at U. S. Steel facilities, including an electric arc furnace at its Fairfield, Ala., location and upgrades at other mills, are ongoing.

Import Performance
Preliminary overall pipe and tube import market share increased in July by about 4 percentage points but remains within the variance experienced in recent months. Compared to July last year, import share is relatively flat. In mechanical tubing products, the import share increased by about 2 percentage points for the month but remains about 4 percentage points below pre-Section 232 levels.

Trade Activity
In several trade cases over the last month, the United States International Trade Administration (USITA) completed five-year sunset reviews and determined that revoking orders would likely lead to continued or recurrent dumping and subsidies.

Those cases include welded stainless steel pressure pipe from Malaysia, Thailand, and Vietnam; circular welded carbon quality steel line pipe from China; welded, large-diameter line pipe from Japan; circular welded austenitic stainless pressure pipe from China; and oil country tubular goods from Turkey and India.

Regarding antidumping duty administrative reviews, the USITA has issued amended preliminary and final results for several pipe and tube products. They include the final results in the case of circular welded carbon-quality steel pipe from the United Arab Emirates; preliminary results in the case of light-walled rectangular pipe and tube from Mexico; and preliminary results in the case of certain circular welded nonalloy steel pipe from Mexico.

Overall Shipping Performance
Overall pipe and tube shipments for the sectors of the market that we cover declined in August by about 4 percent and were about 5 percent below the same period a year ago. Imports fell by about 8 percent in August from July, while domestic shipments declined by about 2 percent. Compared to August 2018, domestic shipments and imports are down by 2.5 percent and 11 percent respectively. Imports continue to be affected by the Section 232 legislation.

Hot-rolled Steel
According to data from the SteelBenchmarker, the index for hot-rolled band (HRB) price was 0.68 in September, which was down from last month’s index of 0.76 and much lower than the peak in this cycle, which was 1.21. This is a recovery from the bottom, which occurred in June when the index hit 0.68. HRB prices have been volatile since the trade case duties were initiated early in 2019. Today, prices have softened on weaker demand and additional capacity despite antidumping duties and Section 232. In periods of volatility, welded pipe producers may find opportunities to bump prices on the back of raw material increases, but only if pipe and tube demand is supportive. The downside is the management of inventory.

As one of the Asia's most influential tube and pipe industry event, Tube China has been devoting to the steel pipe industry for many years. The exhibits include raw materials, pipes and fittings, tube manufacturing machinery, rebuilt and reconditioned machinery, process technology tools and auxiliary machinery, pipeline and OCTG technology, profiles and machinery, etc. It also provides support for coherent measuring and control technology, testing engineering and other specialist areas. Tube China 2020 will be held at the Shanghai New International Expo Center from September 23 to 26, 2020. 

Source: the fabricator