Conservative purchases keep US domestic HDG prices stable

Stability within the US domestic coated flat steel spot market has not wavered, buoyed by a steady stream of purchasing activity. Often, when prices are in the midst of a rapid upswing, customers hedge buy early to delay paying higher prices for as long as possible. Despite rising prices following four rounds of price increases in less than three months, purchasing activity has remained on an as-needed basis, highlighting buyers' lack of confidence that spot prices will remain high for the long term. However, this conservative buying pattern has actually allowed spots to hold steady longer than some anticipated. Metals Service Center Institute (MSCI) data showed that buyers are keeping inventories lean, requiring them to make purchases on a regular basis.

The fourth price increase (announced at the end of July) didn't fully stick--hot dipped galvanized (HDG) and Galvalume coil spot prices are still $0.50-$1.00 cwt. ($11-$22/mt or $10-$20/nt) shy of official mill prices, but the increase did firm up the spot market. Sources tell SteelOrbis that mills are content at continuing to take orders at current prices, and pushing for slightly higher numbers whenever possible. While short-term stability appears to still be in the cards for the US coated flat steel market, an anticipated bump in import arrivals in early fall (from orders placed in May and June) is likely to contribute to service center buyers' minimalist purchasing patterns.