US HDG activity quiets ahead of labor negotiations decision

US domestic coated flat steel spot prices appear to have reached a peak as the market awaits a decision regarding labor negotiations at two major mills.  Throughout August, buying activity picked up and prices were steadily increasing on a week-to-week basis. However, sources tell SteelOrbis that the downside potential of making any major buys right now is growing. Labor contracts at both US Steel and ArcelorMittal USA expire on September 1 (and no extensions have been issued, according to news reports), and the impact on prices is expected to vary significantly depending on whether or not a new contract is signed in time.

Industry insiders predict that if a contract is not signed and steelworkers go on strike, steel prices will surge; but if a labor contract is negotiated in time, prices for certain products like flat rolled will quickly decline. Therefore, it's not surprising that while some smaller buyers are still placing orders as needed, but larger customers with bigger inventories are currently sitting on the sidelines and delaying major buys until early next month. With the Labor Day holiday next week, spot prices are unlikely to move much over the next week, and domestic hot dipped galvanized (HDG) and Galvalume base spot prices are expected to remain the current range of $37.00-$39.00 cwt. ($816-$860/mt or $740-$780/nt) ex-Midwest mill, with spots for HDG coil with coating extras  unchanged as well.