US domestic HDG prices set to rise

Following a second round of price increases from US domestic flat rolled mills, coated flat steel spot prices are likely to trend further upward. After increasing a week ago, US domestic hot dipped galvanized (HDG) and Galvalume spot prices have stayed neutral since last week, although prices are likely to increase again by next week. On Friday, AK Steel announced that it would increase all spot market base prices by $2.00 cwt. ($44/mt or $40/nt), following an increase in early July for the same amount; and by Monday, Nucor and Severstal NA had made similar announcements. However,  Severstal's increase reflected a surprising $1.75 cwt. ($39/mt or $35/nt) boost from the early July announcement. Although only about half of the initial increase has been absorbed into the spot market, mills are expected to begin pushing for higher prices over the next couple weeks, especially on the heels of a substantial increase in scrap prices in August.

A few early deals have shredded scrap prices already fully recovering the losses in July, if not more, and busheling prices are anticipated to show major gains as well, giving mills more leverage to demand higher prices although buyer inventories are still decent, demand is stable, and availability remains profuse. Domestic HDG and Galvalume base spot prices are between $35.00-$36.00 cwt. ($772-$794/mt or $700-$720/nt) ex-Midwest mill, reflecting no change since last week, but considering scrap's impending uptrend and the anticipation that all other mills are likely to soon announce similar increases, current prices may soon be difficult to come by, at least temporarily.