US domestic HDG continues its holding pattern

While prices have managed to sustain, concerns that softening-- if not total slippage -- could emerge later in Q4, largely due to the ongoing issue of mill production levels which continue to be above and beyond current market demand.

Demand within the automobile sector, a large driving force behind end-use demand for coated steel products, is also still shaky. 

According to the September auto-sales statistics released by Chevrolet, Buick, and GM, "combined sales for the month of September were up 22 percent month-on-month to 172,969 units".  However, when you compare that side-by-side with figures released in August, when US auto sales had hit a 28-year low (172,232 total combined units for the three automakers), the gains posted aren't as impressive as they initially seem.  Ultimately, while posted month-on-month gains are evident, it's still too soon to tell if those numbers are good, bad, or indifferent.

But, with the looming mid-term elections just a month away, buyers and sellers of HDG are hopeful that a potential political party shift in Washington could spur consumer confidence, which could bolster the seemingly stagnant steel market.  With greater consumer confidence comes a loosening of purse strings, meaning cars and farm equipment could be upgraded sooner as opposed to letting things run until holding off is no longer an option.

For now, the forecast for US domestic HDG has shifted modestly, now at neutral to slightly down, with many buyers now able to negotiate deals on larger orders for about $1.00 cwt. under the ranges listed below due to a weaker-than-expected contract season coupled with continued over-production.

Of note, however, is the recent news that US Steel will be shutting down their Hamilton blast furnace (thus curbing production output), which could potentially entice other mills to follow suit. Some believe that this could finally be the movement everyone's been waiting for- because if mills can cut production to levels more in line to market demand, moving forward, it will allow for transaction pricing to be more tightly managed.

Looking offshore, import pricing has also remained fairly uninteresting.  China, while having reduced pricing on HDG 0.019"x48" G90 and Galvalume 0.019x41.5625 Gr80/AZ55, is still offering within ranges that remain unattractive to most traders.  The most significant change from last week, though, comes in the form of newly introduced Taiwanese offerings, however,  with prices as high as they are, no one is biting.

*Mexican offers are FOB loaded truck US border states.

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