US domestic HDG prices plummet but turnaround could be near

Spot prices for coated flat steel products in the US have come down substantially since last week, but some signs are beginning to point to a possible reversal. The $1.50 cwt. ($33/mt or $30/nt) drop in HDG prices across the board this week was largely spurred to the approximately $55/lt decline in busheling scrap prices this month, and flat rolled buyers who continue to delay making any major purchases. HDG and Galvalume base prices have fallen into the range of $33.00-$34.00 cwt. ($728-$750/mt or $660-$680/nt) ex-Midwest mill. Meanwhile, spot prices for HDG 0.012"x40.875" G30 and HDG 0.019"x48" G90 are now $43.00-$44.00 cwt. ($948-$970/mt or $860-$880/nt) ex-Midwest mill.

With prices falling so dramatically in the past few weeks, there are rumors swirling that mills may soon attempt a price increase to stem the fall. Even though lead times have not extended whatsoever and demand is still only tepid, certain factors are pointing to at least some possible success for any increase. Scrap prices are expected to recover at least slightly in November, and raw steel production levels hit a new low for 2012 this past week. The American Iron and Steel Institute (AISI) reported Monday that raw steel production fell by 1.2 percent last week, the third consecutive decline, bringing capacity utilization rates to 70.3 percent. But for now, another flat rolled price decrease by next week is not out of the question.