US buyers hold off on orders as HDG spot prices decline

US domestic hot dipped galvanized (HDG) spot prices are declining at a rapid pace, which is keeping purchasing activity minimal. Expectedly, with flat rolled spots reflecting a drop on a nearly daily basis, most buyers aren't rushing to place orders. HDG and Galvalume spot prices are anticipated to drop by another $1.00 cwt. ($22/mt or $20/nt) by next week due to lacking mill order books and hesitant buyers. Many distributors made the necessary stock-ups in mid-August to hedge against a possible strike at US Steel and ArcelorMittal and are therefore now holding on to comfortable inventories that are allowing them the opportunity to sit on the sidelines and wait until the market bottoms before taking possession of any major tonnage.

But a bottom isn't anticipated to be reached in the immediate future and sources predict that prices will remain weak through the remainder of September, and only positive developments from the scrap market in October could help stem the price declines (the scrap price trend for October remains unclear for now). Since last week, domestic HDG base prices fell by $1.00 cwt. on the low end and $2.00 cwt. ($44/mt or $40/nt) on the high end to $35.50-$36.50 cwt .($782-$805/mt or $710-$730/nt) ex-Midwest mill. Already, bigger buyers are able to place orders under the range, particularly for products with more coating extras. HDG 0.012"x40.875" G30 and HDG 0.019"x48" G90 spot prices have also slipped by $1.00 cwt. in the past week and now range from $45.50-$46.50 cwt. ($1,003-$1,025/mt or $910-$930/nt) ex-Midwest mill, with the majority of transactions taking place toward the lower end of the range.