Falling US HDG prices deter import activity

As US domestic hot dipped galvanized (HDG) spot prices continue to drift lower, interest in imports has turned almost entirely silent.

US domestic service center hesitance to replace inventories because resale prices have come down so substantially in just the last two months continues to have a negative effect on US domestic HDG and Galvalume spot prices. Even with some end-use sectors--automotive, appliance and machinery, in particular--providing steady demand in the flat-rolled sector, the general fear that domestic prices have not yet hit bottom is keeping buying activity low, and in turn, prices soft.

Domestic mills have been trying to keep base prices for HDG and Galvalume from falling too quickly, opting to cut some costs of coating extras, as well as absorbing freight costs, instead. Consequently, domestic HDG base spot prices have fallen $0.50 cwt. ($11/mt or $10/nt) since last week into the range of $42.00-$43.00 cwt. ($926-$948/mt or $840-$860/nt) ex-Midwest mill. On the other hand, HDG 0.012"x40.875" G30 and HDG 0.019"x48" G90 spot prices have dropped $1.00 cwt. ($22/mt or $20/nt) in the last week and are now $50.00-$52.00 cwt. ($1,102-$1,146/mt or $1,000-$1,040/nt) and $53.00-$54.00 cwt. ($1,168-$1,190/mt or $1,060-$1,080/nt), respectively, both ex-Midwest mill.

Price softening has been more substantial for domestic Galvalume prices since last week. Sources indicate that sales of the niche construction product have fallen off, and service centers are rapidly trying to rid themselves of excess inventories. In just the last week, Galvalume base spot prices have fallen $1.00 cwt. to $42.00-$43.00 cwt. ex-Midwest mill, and Galvalume 0.019x41.5625 Gr80/AZ55 spot prices have dropped $2.00 cwt. ($44/mt or $40/nt) on the low end and $1.00 cwt. on the high end into the $52.00-$54.00 cwt. ($1,146-$1,190/mt or $1,040-$1,080/nt) ex-Midwest mill range.

It is not yet certain how much further US HDG and Galvalume spot prices will fall, making imports a non-starter at the moment. Trader sources tell SteelOrbis that US buyers can't even see clearly what US prices will be tomorrow, let alone three months from now, when import orders placed today are due to arrive. And the little bump in interest in imports last week appears to have entirely faded now. Indian and Chinese mills have rolled over their June offer prices for the US into July, but most offers are still just $1.00-$2.00 cwt. below US domestic spot prices, and of no interest to US buyers. South of the border, Mexican mills are actively looking to the US for orders, and are likely to drop their offer prices in the not-too-distant future.

**DDP loaded truck delivered into Houston

**DDP loaded truck in US West Coast ports