The New Year has arrived, but with the slow business conditions, the US hot dip galvanized (HDG) market is still on winter break.
While there is a good deal of optimism that US demand for steel, including coated flat rolled products, will start to show at least some modest improvement in early 2009, for now things are still pretty quiet as everyone waits for the first signs of a rebound.
Flat rolled mills are still producing at very limited capacities, and while customers' inventories are growing ever-leaner, no one is ready to return to the market yet. With the bleak economic conditions, the demand for steel just isn't there, and the credit crunch is further crimping sales, as buyers are no longer to get the credit they need to make large purchases. Credit lines have been cut across the board, for service centers, traders and end-users alike.
Nevertheless, the New Year has begun, and along with the usual first quarter optimism, the US will also get a new president this January. The steel industry is hopeful that the new administration will revive the economy and aid the domestic industry in the form of an infrastructure stimulus package that will require large amounts of steel.
For now, the US steel market remains still and quiet, with very little buying or selling taking place, and the galvanized coil market is no exception. On the bright side, service centers report that their inventories are shrinking, and traders say that in recent weeks, the spot market for import HDG perked up a little as mills tried to fill last minute holes in their order books before the holidays.
Going forward, with the significant drop in production and anticipated rise in US busheling scrap prices this month, the US domestic HDG market is not likely to see much more, if any, price decline. On the import side, traders indicate that prices may still have slightly more room to fall as foreign mills compete with each other for business.
Current domestic HDG coil base prices on the spot market continue to range from approximately $30.00 cwt. to $32.00 cwt. ($661 /mt to $705 /mt or $600 /nt to $640 /nt) from most mills in the Midwest region. For sizes 0.019" x 48" G90 (0.48 mm x 1.219 m), domestic mills offer in the range of $39.00 cwt. to $41.00 cwt. ($860 /mt to $904 /mt or $780 /nt to $820 /nt) ex-mill Midwest, while domestic 0.012" by 40.875" G30 (0.30 mm x 1.04 m) is offered within the range of $43.00 cwt. to $45.00 cwt. ($948 /mt to $992 /mt or $860 /nt to $900 /nt) ex-mill Midwest.
Offers from China and India for HDG 0.019" x 48" G90 (0.48 mm x 1.219 m) items have also trended sideways since last week, with most offers ranging from $35.00 cwt. to $37.00 cwt. ($772 /mt to $816 /mt or $700 /nt to $740 /nt). China's offers are duty-paid, FOB loaded truck West Coast ports, while India's offers are duty-paid FOB loaded truck Gulf ports. For the same size and coating, Taiwanese offers are also steady from last week, at a range of approximately $37.00 cwt. to $39.00 cwt. ($816 /mt to $860 /mt or $740 /nt to $780 /nt) duty-paid, FOB loaded truck West Coast ports.
New offers from China and India for 0.012" by 40.875" G30 (0.30 mm x 1.04 m) still range from $39.00 cwt. to $41.00 cwt. Mexican offers for the same size and coating at the border crossing continue to range from $40.00 cwt. to $42.00 cwt. ($882 /mt to $926 /mt or $800 /nt to $840 /nt).
The above import offers are for late March/April arrivals except for the more prompt Mexican orders.