Price hikes abound in US domestic HDG market

Spot prices in the hot dipped galvanized (HDG) market are up approximately $2.50 cwt. ($55/mt or $50/nt) across the board since our last report a week ago as a result of ongoing increase announcements from domestic mills.

Spot prices for HDG and Galvalume base products are now $37.50-$39.50 cwt. ($827-$871/mt or $750-$790/nt) ex-Midwest mill, although offers at the lower end are now fewer and farther between as a result of the fourth set of increase announcements from Nucor and other US mills this past week, which put Nucor's benchmark asking price at $40.50 cwt. ($893/mt or $810/nt) for both HDG and Galvalume.

Spot prices of HDG and Galvalume coating extras are now $48.50-$50.50 cwt. ($1,069-$1,113/mt or $970-$1,010/nt) although sources indicate that buyers will be hard-pressed to book orders below $50.00 cwt. ($1,102/mt or $1,000/nt) after the upcoming Christmas holiday. Such perceptions have created another rush of order activity from buyers who had been placing few orders, and keeping inventories lean in the final months of the year.

Lead times are still extending outward and now vary from approximately six-to-12 weeks depending on the mill, and overall booking activity has been a pleasant surprise to many market players who had been predicting a fairly quiet end to the 2010 year less than two months ago.

Despite ongoing rumblings that demand has not picked up enough to justify another increase, the latest data from the Metal Service Center Institute (MSCI) indicates that shipments from steel service centers are up, while inventory levels have declined. Daily shipments of flat-rolled products totaled 95,700 nt in November, up 6 percent over October levels, and a staggering 19 percent higher than levels reported in November 2009, while inventories are down from a 2.4-month supply in October, to a 2.3-month supply in November.  

Import offers have flooded the market almost as suddenly as increases from domestic mills, and competitive offers from China, India, Taiwan, and Korea have peaked the interest of some US buyers. And if the price increases continue well into the new year, and lead times extend as quickly as they have been, more buyers may choose to invest in product from offshore. "I'm seriously considering it" one Southeast distributor told SteelOrbis. "I don't need product until March anyway, and the $46.00 cwt. offer from China is looking more attractive every day."