Is the stage being set for a price increase in the US HDG market?

While US domestic coated flat steel spot prices are still weakening, some indicators are pointing toward an attempted turnaround. In the last week, while domestic hot dipped galvanized (HDG) base spot prices are still mostly between $34.00-$35.00 cwt. ($750-$772/mt or $680-$700/nt) ex-Midwest, unchanged since last week, spots for other products are down about $1.00 cwt. ($22/mt or $20/nt) across the board. But although the general base price spot range hasn't moved for most customers, buyers of products with extensive extras have received discounts of up to $2.00 cwt. ($44/mt or $40/nt) off the base cost. HDG 0.012"x40.875" G30 spot prices are now $44.00-$45.00 cwt. ($970-$992/mt or $880-$900/nt) ex-mill, while HDG 0.019"x48" G90 prices, usually about $1.00 cwt. higher, have sunk into a similar range.

While further declines in the next couple weeks are probably inevitable, rumblings that a price increase for August and/or September shipments could soon be announced are amplifying. US raw steel production has been declining since late May and capacity utilization rates have dropped from about 81 percent to 75 percent over the same period. Additionally, distributor inventories may soon need to be replenished, following extremely cautious buying patterns the last couple months. What could derail any attempted price increase is July's expected $20-$30/lt drop in domestic scrap prices. One service center buyer explained that "a price increase announced too soon after a scrap price decrease won't go over so well."