Pricing purgatory seen within US domestic HDG market

Sustained volatility within the US domestic flats market compounded by anemic-at-best activity levels have led to proceed-with-caution sentiment for both buyers and sellers of coated products, say market players.

Although domestic spot prices have remained neutral since our last report a week ago, the trend is "definitely downward" - with an increasing number of service centers reporting that transactions more toward the lower end of the below range becoming more common.  And much like buyers of hot and cold rolled coils (HRC and CRC, respectively), anyone who has a sizeable order to place will likely not have much difficulty in obtaining deals lower than that.

"Mills are just hungry for the bone," commented one West Coast service center, noting that almost record short lead times have buyers knowing they have the full upper hand.

The challenges for HDG remain the same as they have been in previous weeks: too much product being rolled, not enough activity, and definitely not enough construction to support current production levels.  Demand while still relatively stable," it's still nothing to write home about", said one buyer in the South, furthering the out-of-skew market will likely continue to contribute to price softening.

Construction, or lack thereof, continues to be one of the largest hurdles to overcome.  Take, for example, the October 19 report released by the Bureau of Labor Statistics. Although it's indicated that housing starts had actually increased by 0.3 percent, month-on-month, from August to September; building permits for privately-owned housing units declined by 5.6 percent.

And considering the traditionally cold winter months are now upon us, construction, as typical of this time of year, is anticipated to continue to fall off before it picks back up next spring.  

As for imports go, sales prices have remained neutral.  What's most interesting, however, is that Mexico is continuing to play aggressively in order to secure orders.  Buyers throughout the US have reported that being able to book Mexican HDG at levels below their "official" asking price is not a difficult undertaking.

*Mexican offers are FOB loaded truck US border states.

**Chinese, Taiwanese Indian, and offerings are duty-paid FOB loaded truck, US Gulf ports.