Holidays and severe weather curb activity in US domestic HDG market

A short holiday week followed by tornado storms hitting the Midwest and Southeast US in the past week has slowed activity in the US domestic hot-dipped galvanized (HDG) market.

With many taking time off before and after the Easter holiday on April 24, both US domestic and import activity was quiet in early last week, and as the week progressed and over 150 tornados began ravaging through the US Midwest and Southeast, activity in some areas ground to a halt. Even areas that were not directly hit by the tornados continue to battle power outages and road closures. One trader in the South told SteelOrbis that power outages throughout Mississippi, Georgia and hardest-hit Alabama have made conducting business difficult, if not impossible the last few days.

But even before the Easter holiday and this past week's flurry of deadly tornados, overall purchasing activity had been light since early April as the trend for spot prices for US domestic HDG and Galvalume has been pointing downward. Although HDG and Galvalume base spot prices are unchanged from our last report a week ago at $46.00-$48.00 cwt. ($1,014-$1,058/mt or $920-$960/nt) ex-Midwest mill, they are expected to fall at least another $2.00-$3.00 cwt. ($44-$66/mt or $40-$60/nt) throughout the month of May.

Buyers of HDG and Galvalume tell SteelOrbis that most are living hand-to-mouth in terms of inventory stocks, indicating that they are sitting on the sidelines over the next few weeks until the long-term trend for the US domestic flats market becomes clearer.

And in addition to highly discounted import prices, domestic flats mills in the Midwest have been battling competition from mills in other parts of the country. Throughout April, at least one West Coast mill was offering HDG coil to buyers in the South and Midwest as much as $3.00 cwt. ($66/mt or $60/nt) below average ex-Midwest mill spot prices.

As for imports, Indian and Chinese HDG offers of 0.012"x40.875" G30 and 0.019" x 48" G90 in the average range of $50.00-$52.00 cwt. ($1,102-$1,146/mt or $1,000-$1,040/nt) duty-paid FOB loaded truck in US Gulf ports continue to the most competitive. However, traders noted that Chinese mills have been trying to raise their offers to the US recently, and current offer prices may only be available for the next couple weeks.

**FOB loaded truck delivered into Houston