Imports keep US domestic HDG spot prices soft

With an abundance of import offers and high levels of offshore material arriving in the US ports, US domestic hot dipped galvanized (HDG) spot prices are faltering.

Most import offers continue to be well below US domestic HDG spot prices, falling in tandem with softening US prices over the last couple months. The tactic has boded well for offshore sources like India, China and Taiwan which have been exporting HDG coil to the US in large quantities recently. Based on US Steel Import Monitoring and Analysis (SIMA) data, India exported 3,323 mt of HDG sheet and strip to the US in March and 30,907 mt in April. Taiwan exported 10,304 mt of HDG to the US in March compared to 20,879 mt in April; China exported 22,592 mt of HDG sheet and strip to US in April compared to 3,983 mt in March and as of May 12, license data point to 18,741 mt of HDG sheet and strip from China already landing in the US.

The high imported tonnage levels are expected to continue throughout May and into June and even July, boosting run-down service center inventories, and allowing US buyers to further delay placing orders domestically. But inquiries into current futures offers have slowed in the last week and are not expected to pick up in the immediate future. Offshore order activity is likely to remain slow throughout May and much of June, but won't halt entirely, as there is still a considerable margin between US HDG spot prices and import HDG offers.

**FOB loaded truck in US Gulf ports

In competing with significantly less expensive imports arriving into the US, US domestic HDG mills are trying to regain their market share at the expense of prices. Although spot price ranges for HDG and Galvalume base have stayed the same since our last report a week ago at $45.00-$47.00 cwt. ($992-$1,036/mt or $900-$940/nt) ex-Midwest mill, in the last few days, the first rumblings of sub-$45.00 cwt. ex-mill HDG spot deals emerged.

Flat-rolled spot prices have been falling incrementally since late March but the decline in late May and into June already looks to be more substantial. While it is too early to predict how far spot prices will drop before leveling out, and even possibly trending back up in Q3, sources tell SteelOrbis that HDG and Galvalume base prices falling another $3.00-$4.00 cwt. ($66-$88/mt or $60-$80/nt) by late June is all-but guaranteed.