HDG prices stable but price negotiations still available

Last week, sources close to SteelOrbis said that while domestic HDG prices remained stable, (and deals were still available to buyers who expressed interest in booking larger tonnages,) many believed that mills’ were on the verge of announcing another price increase.

This was largely tied to the belief that demand for finished steel products had started to improve. For example, on Monday of last week, it was announced that mills’ capacity utilization rates had improved slightly, from roughly 51.7% to 53.7%, week-over week.  

This week, however, while market sentiment is still more positive than it was three weeks ago, it’s not as bright as it was last week. The upside is that lead times have extended slightly and order activity seems to be picking up. The downside is that some believe the extension of lead times is “artificial at best, because a lot of buyers jumped in when they felt confident the market had bottomed,” a source said. “The big concern is that we’ll see a similar situation to what happened last September. The market bottomed, mills announced increases, lots of people placed orders, and lead times extended. But as soon as people started getting their steel, order activity fell back off and prices shifted back downward.”

There is also growing concern that scrap prices may trend sideways, as opposed to up, during the June buy cycle.  If scrap holds at sideways, in the absence of increased capacity utilization rates, mills are likely to have a “very hard time getting prices up from where they are now.”

For now, the HDG market continues to be the weakest flat rolled steel market segment, as supply is still outpacing demand. This week’s domestic HDG and Galvalume spot market prices are listed in the chart below.