While the price increase announcements for US domestic HDG have come and gone, the push by mills to get pricing above levels reported a week ago has not yet been successful- which, considering lead times for coated products still fall in the range of four to five weeks, has buyers questioning exactly how much leverage mills will have in trying to push prices upward. Short lead times mean softer-than-liked order books, and softer-than-liked order books mean salespeople continue to be under pressure to book tons.
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.
Cwt. Metric Ton (mt) Net ton (nt) Change from last week US domestic HDG base price $33- $35 $728 - $772 $660-$700 neutral 0.012"x40.875" G30 ex-Midwest mill $44 - $46 $970- $992 $880-$920 neutral 0.019"x48" G90 ex-Midwest mill $44 - $46 $970- $992 $880-$920 neutral Galvalume ex-Midwest mill $33-$34 $728 - $750 $660-680 neutral 0.019x41.5625 Gr80/AZ55 ex-Midwest mill $45 - $46 $992 - $1,014 $900-$920 neutral
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.
Import HDG offers to the US Cwt. Metric ton (mt) Net ton (nt) Change from last week 0.012"x40.875" G30 China $45.50-$47.50 $1,003-$1,036 $910-$950 neutral India $45-$47 $992-$1,036 $900-$940 neutral Mexico $43-44 $948-$970 $860-$880 neutral 0.019"x48" G90 China $44.50-$46.50 $981-$1,025 $890-$930 neutral India $45-$46 $992-$1,014 $900-$920 neutral Galvalume 0.019x41.5625 Gr80/AZ55 China $46-$47 $1,014-$1,036 $920-$940 neutral Taiwan $45-$47 $992-$1,036 $900-$940 neutral Mexico $43 - $44 $948 - $970 $860-$880 neutral
*Mexican offers are FOB loaded truck US border states.
**Chinese, Indian, and Taiwanese offerings are duty-paid FOB loaded truck, US Gulf ports.