US domestic HDG market trending neutral despite increase announcement

Purchasing managers are continuing to report an overt lack of belief that "anything will be coming around the corner which will have people wanting to buy more steel",  and it's believed that the trend of closely (and tightly) managing inventory levels will once again begin to run rampant.   

"I don't see any willingness on the part of end users or service centers to take on additional risks by increasing their buys," said one service center.  "Demand is off and until that changes people are going to be cautious."

This too, may contribute to a crumbling solidarity on the mill level when it comes to holding the line on pricing- with deals being made to obtain what few orders are out there-  as was seen in June when buyers seemingly took the month off.  

Another challenge lies in the shift from summer to fall, which marks the time of the year when already-weak construction activity will begin to taper (meaning end-use need for HVAC systems and other appliances will soon start to wane from already less-than-exciting levels), many fingers are being crossed that auto sales statistics for the month of September will show improvement over the across-the-board losses reported by automakers in August, as this could help boost order activity within the automotive sector.

For now, the forecast for US domestic HDG will remain neutral, to slightly up, with more clarity as to whether the spot market will begin to absorb the latest round of price increases expected to emerge as the month progresses.   Order activity, however, is expected to trend more silent than buying levels seen at the beginning of the month.

Looking offshore, import offers have also trended neutral since our last report a week ago.  However, with demand being shaky and inventories being managed tightly, it's not expected that any significant tonnages will be booked.

However, orders which were booked several months ago are still being delivered to US ports. 

According to the most recent data posted by the US Department of Commerce Import Administration, the total import tonnage of HGD, sheets and strip, for the month of September was at 27,535 mt (license data) as of September 9, with the most significant offshore importer being China, at 7,514 mt.  While import tonnages were seen as high as 131,275 mt during May, import tonnages have declined month-on-month since then, and it is anticipated that September import tonnages will be slightly below the 111,686 mt (license data) seen in August.

*Mexican offers are FOB loaded truck US border states.

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