Although the US domestic hot dipped galvanized (HDG) market held relatively stable in our last report a week ago, the continuation of excess production and sub-par demand has once again lent itself to further softening for products within this sector.
At the current time, buyers of coated products seem to be holding off on additional bookings due to continued uncertainty surrounding price volatility within the domestic market. While it is not anticipated that transaction pricing will plummet, it should be noted that people are continuing to be mindful of their dollars; making every effort to ensure maximum profitability by minimizing risk. "We'd rather miss out on an order than over purchase and realize we made a mistake," commented a West Coast service center. "Everyone still has 2008 fresh in their minds, and all the people I've spoken with are moving cautiously."
According to industry forecasts, though, consumption of galvanized products is still anticipated to experience a 30 percent year-on-year uptick from levels reported in 2009. Yet considering where the market was in 2009, that increase in activity, while certainly welcome, is not enough to have service centers popping champagne corks in celebration. Until the lingering question as to whether the market will change from one day to the next, unless orders are pre-sold, the commonplace of buying-as-we-need-it (as opposed to historical futures and hedge buying) has in fact become the "new normal".
For now, the forecast for coated products is similar to that of hot rolled coil (HRC) and cold rolled coil (CRC), but although HDG and Galvalume products will trend softer to slightly down, there is the strong likelihood of price stabilization to take place in the first half of the third quarter.
In terms of pricing, the upper end of the range for US domestic HDG base spot pricing has softened by approximately $1.00 cwt. ($22/mt or $20/nt) since our last report a week ago, with offers now being seen in the approximate range of $37.00 cwt. to $38.00 cwt. ($816/mt to $838/mt or $740/nt to $760/nt), ex-Midwest mills.
Transaction pricing for 0.012" x 40.875" G30 (0.30 mm x 1.04 m), has also softened by approximately $1.00 cwt. ($22/mt or $20/nt) since our last report, and are now being seen in the approximate range of $49.00 cwt. to $51.00 cwt. ($1,080/mt to $1,1247/mt or $980/nt to $1,020/nt), ex-Midwest mills.
Offerings for 0.019" x 48" G90 (0.48 mm x 1.219 m), though, have experienced a lesser decline than its counterparts, with a modest dip of approximately $0.50 cwt. ($11/mt or $10/nt). Spot offers for this product are now being reported in the approximate range of $46.50 cwt. to $47.50 cwt. ($1,025/mt to $1,047/mt or $930/nt to $950/nt), ex-Midwest mills. It has been reported, though, that lower-tier mills may be offering additional flexibility for larger orders of galvanized products.
Shifting focus to Galvalume coil, domestic transaction prices have softened by approximately $1.00 cwt. ($22/mt or $20/nt) since our last report and can now be found in the approximate range of $39.00 cwt. to $41.00 cwt. ($860/mt to $904/mt or $780/nt to $820/nt), ex-Midwest mills.
The range in offers for Galvalume 0.019" x 41.5625" Gr80/AZ55, have also softened by approximately $1.00 cwt. ($22/mt or $20/nt), and offers for this product are now being reported in the approximate range of $50.00 cwt. to $51.00 cwt. ($1,102/mt to $1,124/mt or $1,000/nt to $1,040/nt), ex-Midwest mills.
Overseas offers, although still priced less attractively than domestic offerings, have continued to tick downward, further indicating potential willingness for overseas mills to actively resume selling in the US market. While a variety of ranges are being reported on the below offerings, the numbers listed represent the most commonly seen transaction prices for import HDG 0.019" x 48" G90 (0.48 mm x 1.219 m) and HDG 0.012" x 40.875" G30 (0.30 mm x 1.04 m).
Import offers for HDG 0.019" x 48" G90 (0.48 mm x 1.219 m) have continued to trend downward since our last report a week ago. Indian offers for this product can now be seen in the approximate range of $49.00 cwt. to $51.00 cwt. ($1,080/mt to $1,124/mt or $980/nt to $1,020/nt), FOB loaded truck US Gulf ports. Chinese offers for this product are now being reported in the approximate range of $46.00 cwt. to $48.00 cwt. ($1,014/mt to $1,058/mt or $920/nt to $960/nt), FOB loaded truck US Gulf ports.
Switching to HDG 0.012" x 40.875" G30 (0.30 mm x 1.04 m), offers out of India have also softened since last week and are now being reported at approximately $50.00 cwt. to $52.00 cwt. ($1,102/mt to $1146/nt or $1,000/nt to $1,040/nt), FOB loaded truck US Gulf ports. Offerings for that same product out of China, however, have remained neutral, with pricing still being seen in the approximate range of $47.00 cwt. to $49.00 cwt. ($1,036/mt to $1,180/mt or $940/nt to $980/nt); FOB loaded truck US Gulf ports.
Looking at Galvalume 0.019" x 41.4625" Gr80/AZ55p, import offers out of India have remained neutral since our last report and continue be found in the approximate range of $54.00 cwt. to $55.00 cwt. ($1,091/mt to $1,213/mt or $1,080/nt to $1,100/nt) FOB loaded truck US Gulf ports. Taiwanese offerings for this same product are being reported in the approximate range of $52.00 cwt. to $54.00 cwt. ($1,146/mt to $1,191/mt or $1,040/nt to $1,080/nt), FOB loaded truck US Gulf ports, yet traders may be able to negotiate deals below this range without much effort. Shifting focus to south of the border, Mexico has offerings for 0.019" x 41.4625" Gr80/AZ55p, in the approximate range of $53.00 cwt. to $54.00 cwt. ($1,168/mt to $1,191/mt or $1,060/nt to $1,080/nt), delivered to customers in US border states.