September spot price levels still uncertain for US HDG market

The US hot dip galvanized (HDG) market is still trending up, but there remains some uncertainty as to where September spot prices will land at.

There are reports from customers that integrated US flat rolled mills are aiming to push up their spot prices by at least another $2.00 cwt. ($44 /mt or $40 /nt) for September bookings, though it is safe to say that most mills are still booking some August production, and at the July/August prices. Meanwhile, other mills, including minimill Nucor, have yet to open their September books and have not begun discussing with customers if or how much they will raise prices. In general, it is expected that US flat rolled prices will rise in September over July/August, but it is not clear how much.

Coated still remains the hottest of the flat rolled products, especially niche products like light gauge and Galvalume, which domestic mills don't produce very much of. Domestic base prices for HDG continue to range from approximately $27.00 cwt. to $29.00 cwt. ($595 /mt to $639 /mt or $540 /nt to $580 /nt) for August orders, but integrated mills like US Steel and Severstal North America are reportedly trying to push this number over $30.00 cwt. ($661 /mt or $600 /nt) for September bookings. Then again, extras remain a major price factor, and these extras vary from mill to mill, and in some cases have caused prices for some coated products to rise much faster in recent weeks than the announced base price increases. For example, domestic offers for 0.012” 40.875” G30 (0.30 mm x 1.04 m), a lighter gauge, “niche” item, have risen by as much as $10.00 cwt. ($220 /mt or $200 /nt) in the last month, while most domestic HDG base prices have only risen by about $4.00 cwt. ($88 /mt or $80 /nt)

Current domestic spot prices for 0.019” x 48” G90 (0.48 mm x 1.219 m), the most commonly produced HDG product domestically, range from $36.00 cwt. to $38.00 cwt. ($794 /mt to $838 /mt or $720 /nt to $760 /nt) ex-Midwest mills, while the lighter gauge item, 0.012” 40.875” G30 (0.30 mm x 1.04 m), is offered at a range of $38.00 cwt. to $40.00 cwt. ($838 /mt to $882 /mt or $760 /nt to $800 /nt) ex-mill in the Midwest. Galvalume base prices are up to $29.00 cwt. to $31.00 cwt. ($639 /mt to $683 /mt or $540 /nt to $620 /nt) while offers of 0.019" x 41.5625" AZ55 (0.482 mm x 1.056 m)  are at a range of $38.00 cwt. to $40.00 cwt. ex-Midwest mills.

There is likely still a good deal of negotiating going on behind the scenes as mills struggle to fill their order books while maintaining the upward price momentum. As usual, it will probably be minimill Nucor's price decision that will dictate the direction of the market in September/October. But overall, domestic HDG prices are expected to trend up in September and probably through October as well. November and December are still iffy at this point, as underlying demand may not be strong enough to carry the upward price momentum through the typically slow holiday season.

Still helping US mills is the lack of competitive import offers. Offshore HDG sources have risen their offers for the US in conjunction with the US domestic hikes, and are still generally charging a premium for their products. Traders comment that for import, only niche item offers are even slightly attractive. Even then, the current import lead times would result in fourth quarter arrivals, which are too risky for most buyers to attempt right now.

The latest import offers of 0.019” G90 from India range from $38.00 cwt. to $40.00 cwt. duty-paid, FOB loaded truck in US Gulf ports, while the latest offers from China are about $2.00 cwt. lower.

Offers of 0.012” G30 from both India and China range from approximately $40.00 cwt. to $42.00 cwt. ($882 /mt to $926 /mt or $800 /nt to $840 /nt) in the Gulf. India is offering Galvalume (0.019” AZ55) at a range of $41.00 cwt. to $43.00 cwt. ($904 /mt to $948 /mt or $820 /nt to $860 /nt) in the Gulf.