Spot price ranges tighten in US domestic HDG market

In anticipation of imminent price increase announcements from US domestic mills, spot price ranges in the hot dipped galvanized (HDG) market have narrowed.

At the beginning of the week ending March 18, US domestic spot prices in the Midwest were unchanged from the previous week. However, after West Coast mills opened May order books on Wednesday and Thursday, raising HDG base spot prices to $51.00-$53.00 cwt. ($1,124-$1,168/mt or $1,020-$1,060/nt) ex-West Coast mill-a $2.00-$3.00 cwt. ($44-$66/mt or $40-$60/nt) increase over spot prices for April deliveries-- spot prices in the Midwest began to tighten.

By week's end, ex-Midwest mill HDG and Galvalume base spot prices were in the range of $49.00-$50.00 cwt. ($1,080-$1,102/mt or $980-$1,000/nt)--up $1.00 cwt. ($22/mt or $20/nt) on the low end compared to week-ago levels as fewer mills became willing to negotiate official asking prices, which currently stand at approximately $50.00 cwt.

The cost of coating extras are not being entirely reflected in daily spot transactions yet, but have firmed in the past week as well. Spot prices on HDG 0.012"x40.875" G30 are up $1.00 cwt. since last week to $60.00-$62.00 cwt. ($1,323-$1,367/mt or $1,200-$1,240/nt) ex-Midwest mill, and while spot price ranges for HDG 0.019"x48" G90 are unchanged from last week (still $60.00-$62.00 cwt. ($1,323-$1,367/mt or $1,200-$1,240/nt) ex-Midwest mill), most orders are being placed at $61.00 cwt. ($1,345/mt or $1,220/nt) and above.

While US spot prices are still rising, offers from offshore sources have remained neutral, and even decreased in the past few weeks. Indian offers of HDG 0.012"x40.875" G30 and Galvalume 0.019x41.5625 Gr80/AZ55 are the most attractive to US buyers at the moment--now $5.00-$6.00 cwt. ($110-$132/mt or $100-120/nt) below US domestic spot prices with lead times just a couple weeks longer than those in the US (lead times in the US are currently in late April/early May and delivery dates from India are in early-to-mid May). Chinese offers of Galvalume 0.019x41.5625 Gr80/AZ55 have also surfaced this week at $56.00-$58.00 cwt. ($1,235-$1,279/mt or $1,120-$1,160/nt) duty-paid FOB loaded truck in US Gulf ports, and even though current offers are $4.00 cwt. ($88/mt or $80/nt) below US spot prices, lead times are in out in June and July and so order activity is light, at best.

Regarding new inventory arriving from imports, according to the most recent data from the Steel Import Monitoring and Analysis System (SIMA), there was a sharp decline of imports of HDG sheet and strip arriving into US ports in February. Import tonnages of HDG sheet and strip totaled 72,494 mt (license data) in February, a 24 percent drop from January imports of 89,836 mt (census data) and the lowest level in over a year. The most significant drop came from India; US imports of HDG sheet and strip from India fell from 17,824 mt (census data) in January to a mere 705 mt in February. Additionally, imports from Canada fell 24 percent to 29,184 mt (license data) in February from 36,108 mt (census data) in January while imports from Mexico dropped nearly 35 percent from 11,158 mt (census data) in January to 8,268 mt (license data) in February.

On the other hand, the most significant month-over-month increases in imported HDG sheet and strip into the US came from Korea, Taiwan and South Africa. Korean exports stood at 11,657 mt (license data) in February (up from 8,632 mt in January); Taiwanese exports totaled 7,439 mt (license data) last month (up from 5,331 mt in January), and South Africa exported 3,467 mt (license data) of HDG sheet and strip into the US in February compared to no recordable tonnage in the past three months.

**FOB loaded truck delivered to Houston ports