US domestic HDG prices show signs of firming

Order activity in the US domestic hot dipped galvanized (HDG) and Galvalume market has picked up significantly over the last couple weeks following published price increases from most US domestic mills--mills that did not release official letters have been verbally informing customers of immediate price increases of $1.50-$2.50 cwt. ($33-$55/mt or $30-$50/nt). While it is not yet certain whether the bump in buying was to replenish inventory levels or to hedge buy in case prices do rise, mill lead times have extended in the last week, and most mills' order books are now in mid- to late December for HDG and Galvalume coil. Some distributor sources have even informed SteelOrbis that they have started to place orders for early 2012.

US domestic spot prices for HDG base, still between $35.00-$37.00 cwt. ($772-$816/mt or $700-$740/nt) ex-Midwest mill, and notable coating extras are unchanged in the last week, but the lower ends of the ranges are expected to be no longer available by week's end. The extended lead times will likely give mills enough leverage to enforce at least a part of their announced increases for at least a few weeks, although anything beyond that remains extremely uncertain. Domestic demand levels remain as they have been over the past few months--steady--while supply levels have continued to rise; US weekly raw steel production rose 2.6 percent last week, according to the American Iron and Steel Institute. So as with previous weeks, unless demand spikes in early 2012 or mills curb production, any increase in prices is likely to be short-lived.