US domestic HDG prices continue to firm up

Hot-dipped galvanized (HDG) prices are inching up as cautious buyers await further price increases from US domestic mills.

US coated buyers were caught off guard Thursday when AK Steel announced a $2.50 cwt. ($55/mt or $50/nt) immediate increase on flat-rolled products-bringing new HDG base offers to $50.00 cwt. ($1,102/mt or $1,000/nt))-but have not yet engaged in any hedge buying against further increases. There is still wide speculation that coated prices are already as high as they can go without any severe pushback, and so buyers are skeptical as to whether or not the last increase can actually stick. The market has already shown signs of softening in the last couple of weeks. After AK Steel raised prices $50/nt on January 20, with the exception of one other mill, other producers only raised prices $40/nt. Furthermore, prices were stalling the last week of January and the first week of February, and buyers suddenly reported that they encountered little trouble negotiating deals below mills' official asking prices.

This last week however, things have seen a marginal uptick, and spot prices have firmed since our last report a week ago. One East Coast trader commented to SteelOrbis that despite about $320/nt in increases in the last two and a half months, "the biggest surprise this week is that demand is still okay" and slowly improving.  End-use demand is still however not recovering fast enough for mills to keep raising prices as buyers are already barely paying the high end of this week's ranges, and there is little indication that the most recent increase will be fully accepted into the market.

Spot ranges for HDG base have not moved from last week although most transactions are now being conducted closer to the higher end of the below ranges. Spot prices for coating extras have however moved up for both HDG and Galvalume products, with the HDG 0.012"x40.875" G30 having the most significant week-on-week increase (up $2.00 cwt. or $44/mt or $40/nt) as available tons at lower prices are drying up.

As for imports, things are quiet offshore and there are no new offers from either Chinese or Taiwanese mills. Elsewhere, traders report little interest in current Indian coated offers, noting that "only a few tons have been booked here and there." Things are quiet south of the border as well, and Mexican mills have not offered HDG or Galvalume to the US since late November, allowing US mills to hold a near-monopoly in their domestic market.