Import pressure looms on the horizon for US domestic HDG market

US domestic coated flat steel spot prices have actually firmed over the last week, but fall import arrivals could have the potential to reverse the trend. Activity within the domestic hot dipped galvanized (HDG) and Galvalume coil has been quiet but stable over the last couple weeks, with purchasing activity holding steady. Continued stability in the market has allowed HDG base spot prices to even firm $0.50 cwt. ($11/mt or $10/nt) on the low end to $37.00-$37.50 cwt. ($816-$827/mt or $740-$750/nt) ex-Midwest mill. But despite the higher prices, underlying uncertainty over the future direction of prices is keeping the vast majority of customers carefully watching inventory levels.

In May/June, when US domestic spot prices only began their ascent, futures offer prices for HDG 0.012"x40.875" G30 and 0.019"x48" G90 from India and China, respectively, became increasingly attractive. Additionally, relatively heavy volumes of Galvalume 0.019x41.5625 Gr80/AZ55 were also placed with offshore mills. These imports are scheduled to arrive in September and October, and sources tell SteelOrbis that customers with imports arriving soon will scale back domestic purchasing activity to make room for the incoming inventory. The impact of the import arrivals on US domestic spot prices will be entirely determined on demand levels in early fall--if customers remain wary and domestic lead times slip, spot prices could become vulnerable to erosion.