US domestic HDG prices fall for third consecutive week

US domestic coated flat steel spot prices are falling at a quickening pace. Domestic hot dipped galvanized (HDG) and Galvalume coil base spot prices are down about $1.50 cwt. ($33/mt or $30/nt) since last week and can now be found between $35.00-$37.00 cwt. ($$772-$816/mt or $700-$740/nt), and $36.00-$37.00 cwt. ($794-$816/mt or $720-$740/nt), respectively, both ex-Midwest mill.  In addition to increasingly cautious buying patterns over the last couple weeks because of rapidly falling prices, sources tell SteelOrbis that with iron ore prices plummeting dramatically throughout October, zinc prices way down, and scrap prices expected to drop about $30/lt in November, the cost of production is dropping substantially as well, allowing mills to be "more flexible with prices." Lower production costs coupled by waning demand and high capacity will likely pressure domestic HDG spot prices lower through at least the next week or two.

Considering that flat rolled demand typically slows substantially in the late fall/early winter, along with demand for other steel products, an immediate drop in domestic mill production rates appears to be the only remedy for the current downward price trend. During quarterly earnings calls over the last couple weeks, steelmakers such as US Steel, AK Steel and Nucor announced plans for maintenance outages in Q4 in addition to running furnaces at lower production levels. However, with HDG and Galvalume lead times as short as two to four weeks, and a 0.8 percent increase in the US weekly raw steel production rate last week, the temporary outages aren't having any effect on curbing the price slide just yet, and industry insiders acknowledge that a more drastic step is necessary.