Sideways movement continues for US domestic HDG

The challenges for buyers and sellers of coated products continue to resonate as they have previously: weak construction, and steady yet lackluster purchasing activity within the automotive sector.

"Everything is the same," said one Midwest buyer.  "Overproduction continues at the mill level and order activity is status quo.  It's hard to get prices up when there's so much steel lying around because the supply-demand model is off from where it should be."

The most recent MSCI report, however, indicates more positive momentum.

According to the most recent flat rolled statistics report released by the Metals Service Center Institute, shipments of flat steel products from US metals service centers totaled approximately 2.0 million tons for the month of August, with inventories being seen stocked to about a 2.3 month supply. 

While this is certainly an improvement from sales and stock levels seen during the same period last year (with shipments up 25.5 percent and inventories having increased by 22.1 percent year-on-year), it also indicates a comfortable month-on-month increase over July- where shipments of flat steel products were reported at approximately 1.7 million tons and inventory levels were reported stocked to about a 2.6 month supply.

As with last week, though, the forecast for US domestic HDG will remain neutral, while buyers look toward the release of September's auto sales statistics, which will be released on October 1, for greater clarity of end-use demand within that sector.

Pricing for imports, however, has shifted.

China, while still offering, has increased their pricing by $1.00-$1.50cwt. on coated products, which has essentially priced them out of the market.  Indian offers have also increased by $1.00 cwt, which has also waned traders' interest. Mexico, however, has reduced pricing on 0.012"x40.875" G30, meaning offerings are now priced $2.00 cwt. below US domestic offerings.

*Mexican offers are FOB loaded truck US border states.

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