US domestic HDG activity improves following increase announcements

A third round of price increases from US domestic coated flat steel mills over the last few days is giving the market a year-end boost. Immediately following the Thanksgiving holiday, the flats market's upward momentum had clearly stalled and buyers began moving to the sidelines and withholding orders until the immediate price trend was clear. Last week, order entry at the mill level was extremely slow, according to SteelOrbis sources, with some customers even insisting on a price decrease. In what many agree was a preemptive strike against any spot price erosion, Nucor announced a $1.00 cwt. ($22/mt or $20/nt) immediate increase last week, a move that was swiftly followed by other mills in the coming days.

So far, it is too soon to determine whether spot prices will move up the full increase amount, but with essentially all mills' lead times for hot dipped galvanized (HDG) and Galvalume coil now in January, spot prices may at least hold firm for the next couple weeks. The third round of increases has translated into a pick-up in booking activity already, but few are willing to place orders for major tons as the market's long-term trend is still uncertain. But, if early expectations for a January scrap price increase materialize, sources say HDG customers will be forced to buy or risk having to pay higher prices.