US domestic HDG market at a crossroads

Last week, mills announced a second round of price increases on US domestic coated flat steel spot prices, but there is debate as to the increase's timing. In the last three or so weeks, spot prices for hot dipped galvanized (HDG) and Galvalume coil have stabilized. Most HDG buying activity has been taking place on the high end of $36.00-$37.00 cwt. ($794-$816/mt or $720-$740/nt) ex-Midwest mill and Galvalume coil spot prices have generally stayed above $37.00 cwt. ex-mill. But despite the market's recent strength, buyers are keeping inventories lean, as confidence over the prices remaining at current levels in the coming months is far from strong.

While many mills have been able to fill September order books with higher priced material, there has been a slight slowdown in booking activity over the last week, causing buyers to question whether prices may have peaked. So, a few mills (Severstal NA, AK Steel, NLMK USA and US Steel) announcing another price increase last week--ranging from $1.00-$1.25 cwt. ($22-$28/mt or $20-$25/nt), depending on the mill--has many questioning whether this is just an attempt to prevent prices from stalling rather than a reaction to lengthening lead times or any strengthening in demand. It's uncertain yet whether the increase will actually impact spot prices--buyers are still too wary to make stock purchases, which will make raising prices further an uphill battle for mills.