US HDG's uptrend continues, but momentum may be slowing

As import Chinese hot dipped galvanized (HDG) sheet offers start to slide, US domestic HDG offers continue to inch up.

Following US flat rolled mills' November/December price movements announced in recent weeks, US HDG base prices have inched up to approximately $33.00 cwt. to $35.00 cwt. ($728/mt to $772/mt or $660/nt to $700/nt) ex-Midwest mills, which is up by about $1.00 cwt. ($22/mt or $20/nt) from October offers. Announced price hikes are even higher – AK Steel announced recently that it will raise HDG base prices to $40.00 cwt. ($882/mt or $800/nt) in December, while US Steel announced a $36.00 cwt. ($794/mt or $720/nt) HDG base price for November/December. However, while spot prices are still inching upwards, the market has yet to absorb all of the domestic price hikes in full.

Coating and extras from domestic HDG producers have also increased as zinc prices have risen, making the domestic price increases for most HDG products exceed the rise in base prices. But again, spot prices have yet to absorb the full increases. The most popular US-produced HDG item, 0.019” x 48” G90 (0.48 mm x 1.219 m), currently ranges from approximately $44.00 cwt. to $46.00 cwt. ($970/mt to $1,014/mt or $880/nt to $920/nt) ex-Midwest mills. Domestic offering prices for this item are up by about $2.00 cwt. ($44/mt or $40/nt) from the October price range quoted about a month ago (see below chart).

For the more the more expensive, lighter gauge HDG item, 0.012” x 40.875” G30 (0.30 mm x 1.04 m), current domestic offers range from approximately $48.00 cwt. to $50.00 cwt. ($1,058/mt to $1,102/mt or  $960/nt to $1,000/nt) ex-mill, Midwest. These offers have risen by a steeper $4.00 cwt. ($88/mt or $80/nt) within the last month. Domestic offers of Galvalume 0.019” x 41.5625” Gr.80/AZ55– aluminum and zinc alloy-coated zinc – are up $3.00 cwt. ($66/mt or $60/nt) from last month, with most offers currently ranging from $45.00 cwt. to $47.00 cwt. ($992/mt to $1,036/mt or $900/nt to $940/nt) ex-mill, Midwest.

Market sources say the overall US HDG and coated product market appears “rock solid” though at least November, though domestic mills are still concerned about whether demand will be sustained through the December/January period. Already, mill price increases becoming slower to take hold when compared to when the market started to take off in June and continued to soar through July and August. Furthermore, cold rolled coil (CRC) has replaced coated/HDG as the hottest segment of the US flat rolled market, and hot rolled coil (HRC) remains relatively weak. There are concerns that if HRC remains weak, it could drag down CRC and HDG prices in turn. As one trader put it, “Something's got to give. Either hot rolled is going to have to go up, or cold rolled and galvanized will have to come down.”

For now, however, the tight supplies, lack of imports entering the US market, and decent demand from automotive and metal building are keeping domestic HDG and coated product prices on an upward course. There is a good chance that other mills will join AK Steel soon in pronouncing a December price increase, but as mentioned, doubts remain as to whether demand is strong enough for prices to keep rising, regardless of whether mills announce more increases.

While domestic offers are still trending up for the time being, import HDG offers from China have grown more competitive in recent weeks, and some fear that if China's domestic flat rolled market continues to slump, import offers from China and other Asian sources could drive down US prices and upset the current tight supply dynamic that is keeping US prices buoyant. Although offers from other import sources have yet to follow China's offers downward and there have yet to be major bookings of Chinese material, the overall price trend for import HDG is now slightly down due to China's influence. However, it also seems unlikely at this point that China or other Asian HDG sources will re-enter the US market too aggressively as antidumping suits from domestic producers would undoubtedly follow.

Based on the latest offers, import Chinese offers of 0.019” G90 now range from approximately $41.00 cwt. to $43.00 cwt. ($904/mt to $948/mt or $820/nt to $860/nt) duty-paid, FOB loaded truck in US Gulf ports. Chinese offers of 0.012” G30 are also offered at the same range. Offers of 0.019” G90 from other import sources are at least $2.00 cwt. ($44/mt or $40/nt) above the Chinese level, and offers of 0.012” G30 from other import sources are at least $3.50 cwt. ($77/mt or $70/nt) higher than the Chinese levels.

Indian 0.019” G90 offers for the US currently range from approximately $43.50 cwt. to $44.50 cwt. ($959/mt to $981/mt or $870/nt to $890/nt) duty-paid, FOB loaded truck in US Gulf ports, while Taiwanese offers of the same material range from $43.00 cwt. to $44.00 cwt. ($948/mt to $970/mt or $860/nt to $880/nt) duty-paid, loaded truck in US Gulf ports.

Offers of 0.012” G30 from India range from $44.50 cwt. to $45.50 cwt. ($981/mt to $1,003/mt or $890/nt to $910/nt), while Taiwanese offers of the same material are about $0.50 cwt. ($11/mt or $10/nt) higher (both are duty-paid, FOB loaded truck in US Gulf ports.)

On the Galvalume side, there are currently import offerings for the US of 0.019” AZ55 from Taiwan, India and China. Taiwanese and Indian offers range from $45.00 cwt. to $46.00 cwt. ($992 /mt to $1,014 /mt or $900 /nt to $920 /nt) duty-paid, FOB loaded truck in US Gulf ports, while Chinese offers are about $1.00 cwt. less (also FOB loaded truck, Gulf).