US domestic mills attempt price increase for HDG

However, mill lead times for coated products are less-than-ideal (four to five weeks) leaving many buyers expecting that should push come to shove, deals below mill asking prices can likely be obtained.

The biggest challenge for HDG, though, comes in the form of recently released automotive sales and construction statistics.

US automaker General Motors (GM) reported that sales for the month of August had fallen to a 27-year low, with a 25 percent year-on-year decline from the same period in 2009.  GM has reported the dip having been impacted by two key factors.  The Cash for Clunkers program (June-August 2009), a $3 billion US federal scrappage program intended to provide economic incentives to US residents to purchase new, more fuel-efficient cars, had many would-be car buyers having already purchased a new vehicle. 

Factor number two came in the form of widespread consumer concern of a double-dip recession, especially since it was reported that the US unemployment rate in August ticked up 0.1 percent to 9.6 percent, after having held steady at 9.5 percent in June and July.

As far as construction goes, the Associated General Contractors of America last week reported that construction employment for the month of July declined in 276 out of 337 metropolitan areas.

"There is no doubt that we have seen an increase in stimulus activity this summer," said Ken Simonson, the association's chief economist. "Unfortunately, that increase in stimulus activity is largely being overshadowed by continuing declines in overall demand for construction that are likely to persist well into next year."

Ultimately, if people aren't buying cars, and buildings (residential or commercial) are not being erected, end-use demand for coated products will remain weak.

For now, the forecast for US domestic HDG will remain neutral, although mills will continue to press for upward movement from the most commonly reported transaction ranges.

Shifting focus to offshore offers, import offers have once again trended neutral since our last report a week ago. Traders continue to report being relatively uninterested in futures, especially considering that arrivals wouldn't begin to appear in US ports until the latter part of the historically-slow fourth quarter.

*Mexican offers are FOB loaded truck US border states.

**Chinese, Indian, and Taiwanese offerings are duty-paid FOB loaded truck, US Gulf ports.