As hot dip galvanized (HDG) prices in the US domestic market have fallen another notch in the last week, buyers suspect the bottom is near and are now thinking ahead for Q1.
Although flat rolled prices probably have slightly more room to fall before bottoming out, production cutbacks and stretched-out lead times on the mill level are getting buyers to pay closer attention to their current inventories, figuring out what they will need to purchase going into the first quarter of 2009. The risk of buying has become less and less pronounced over the last few weeks as the market is likely close to the bottom, and it is advised that buyers start filling their requirements, at the very least, before the market begins to tighten up again.
Most domestic mills have verbalized to customers that their order books will be closed for the year within the next week and are encouraging buyers to buy now. The incentive to buy now is a large one: price increases for Q1 are expected. Although at this point it is hard for most customers to imagine mills getting away with a price increase, mills see it a bit differently. Busheling scrap prices have most likely already hit rock bottom, and with the production cuts that mills were forced to initiate, lead times for flat rolled products are being pushed out, which will lead to market tightening and could quite possibly lead to a price increase in early first quarter.
However, prices have not rebounded yet: HDG coil prices have fallen, on average, by another $2.00 cwt. ($44 /mt or $40 /nt) since last week with spot prices for base sizes now ranging from $37.00 cwt. to $40.00 cwt. ($816 /mt to $882 /mt or $740 /nt to $800 /nt) from most mills in the Midwest region. For sizes 0.019" x 48" G90 (0.48 mm x 1.219 m), domestic mills are selling in the range of $46.00 cwt. to $48.00 cwt. ($1,014 /mt to $1,058 /mt or $920 /nt to $960 /nt) ex-mill Midwest. For 0.012" by 40.875" G30 (0.30 mm x 1.04 m) sized items, domestic mills are falling within the range of $47.00 cwt. to $50.00 cwt. ($1,036 /mt to $1,102 /mt or $940 /nt to $1,000 /nt) ex-mill Midwest. The domestic pricing trend is slightly down, since, while prices are expected to fall slightly in the next couple of weeks, the bottom is getting closer.
On the import side, offers to the Gulf and West Coasts are, on average, a few dollars lower than their domestic counterparts. There has been some traction, although with the domestic market's fate still uncertain, and offshore orders not arriving until mid-to-late first quarter, there still aren't too many sales taking place.
Offers from China for HDG 0.019" x 48" G90 (0.48 mm x 1.219 m) items have decreased by another $3.00 cwt. since last week to a new level of $42.00 cwt. to $44.00 cwt. ($926 /mt to $970 /mt or $840 /nt to $880 /nt) duty-paid, FOB loaded truck West Coast ports.
For the same size and coating, Taiwanese offers have decreased by $2.00 cwt. in the last week, and are now ranging from $44.00 cwt. to $46.00 cwt. ($970 /mt to $1,014 /mt or $880 /nt to $920 /nt) duty-paid, FOB loaded truck West Coast ports.
Meanwhile, Chinese offerings for HDG sized 0.028" x 48" G40 (0.71 mm x 1.219 m) have fallen by another $4.00 cwt. to a range of $38.00 cwt. to $40.00 cwt. ($838 /mt to $882 /mt or $760 /nt to $800 /nt) duty-paid, FOB loaded truck West Coast ports.
New offers from India for 0.012" by 40.875" G30 (0.30 mm x 1.04 m) are now falling in the range of $42.00 cwt. to $46.00 cwt. ($970 /mt to $1,014 /mt or $880 /nt to $920 /nt) duty-paid FOB loaded truck Gulf ports, a decrease of approximately $2.00 cwt. since last week.
For the same size and coating, Chinese offerings have fallen by $2.00 cwt. and are now priced at $42.00 cwt. to $44.00 cwt. ($926 /mt to $970 /mt or $840 /nt to $880 /nt) duty-paid, FOB loaded truck West Coast ports.
Mexican offers for the same size and coating have decreased by $3.00 cwt. Offers from Mexico at the border crossing are ranging from $42.00 cwt. to $44.00 cwt. ($926 /mt to $970 /mt or $840 /nt to $880 /nt).
On the galvalume side of the market, for 0.019" by 48" AZ55 (0.48 mm x 1.219 m) items, domestic offers dropped another $2.00 cwt. to a range of $50.00 cwt. to $52.00 cwt. ($1,102 /mt to $1,146 /mt or $1,000 /nt to $1,040 /nt) ex-mill. As for imports, Taiwan is offering in the 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, West Coast ports, while China is offering in the range of $44.00 cwt. to $46.00 cwt. ($970 /mt to $1,014 /mt or $880 /nt to $920 /nt) FOB loaded truck, US West Coast ports.