Are US domestic HDG prices close to hitting bottom?

US domestic hot dipped galvanized (HDG) spot prices are likely to continue softening in early-to mid-August, but may begin to stabilize soon thereafter.

HDG and Galvalume base spot prices haven't moved in the last week, but transaction prices are shifting toward the bottom of the range of $39.00-$41.00 cwt. ($860-$904/mt or $780-$820/nt) ex-Midwest mill for HDG base and $40.00-$41.00 cwt. ($882-$904/mt or $800-$820/nt) ex-Midwest mill for Galvalume base. In the next couple weeks, with demand low and availability high, spot prices will likely move lower again, with a potential drop of at least $1.00 ($22/mt or $20/nt) by mid-August, after which domestic prices may begin to level out.

Sources tell SteelOrbis that current domestic HDG spot prices are beginning to reach the cost of production for a number of mills--if they haven't already--putting pressure on mills to not let spot prices fall much further. Meanwhile, pent up domestic demand is growing from sparse buying activity over the last couple months, which industry insiders predict could result in a surge of activity once HDG spot prices are eventually perceived to have hit bottom--a target that may be nearing over the next few weeks. One southern manufacturer commented that "once we all believe we've reached a pricing floor, we're going to pile back into the market like herd of sheep."

South of the border, as a result of little US demand for HDG and Galvalume, Mexican mills have become more aggressive in their offer prices for the US.  Newly offered Mexican HDG 0.019" x 48" G90 spot prices are $48.00-$49.00 cwt. ($1,058-$1,080/mt or $960-$980/nt) DDP loaded truck in US Gulf ports--$2.00 cwt. ($44/mt or $40/nt) under US spot prices. Mexican prices for HDG 0.012"x40.875" G30 and Galvalume 0.019x41.5625 Gr80/AZ55 are $1.00 cwt. higher, after falling about $1.00 cwt. in the last week.