US HDG market: Desperate for orders, mills willing to negotiate

The US domestic hot dip galvanized (HDG) coil market is still showing signs of weakness, as buying activity has continued to soften, and pricing levels are still falling.

US domestic spot prices for base sizes of HDG coil are ranging from $49.00 cwt. to $53.00 cwt. ($1,080 /mt to $1,168 /mt or $980 /nt to $1,060 /nt) ex-mill Midwest, while HDG 0.019" x 48" G90 (0.48 mm x 1.219 m) coils are ranging from $58.00 cwt. to $62.00 cwt. ($1,279 /mt to $1,367 /mt or $1,160 /nt to $1,240 /nt) ex-mill Midwest and can be negotiated down further. The range is wide as prices vary from mill to mill; however, most buyers are finding prices right in the middle of the above ranges, with some able to strike deals for lower numbers.

As one buyer put it, "Prices are all over the map." Because of all of the deals mills are willing to make, HDG prices have a very wide range -- well over $100 /nt for some sizes. The price one buyer gets isn't necessarily the same price another buyer will get, as it depends on many factors. Mills are taking into consideration the quantity of the purchase, flexibility of the buyer's schedule, among other things, when agreeing on an actual transaction price. One thing is for certain though: it is a buyer's market.

On Thursday, Nucor, one of the "big three" flat rolled mills announced that it was lowering its galvanized coating weight extras to reflect its lower zinc costs. Effective for orders shipping the week ending November 1, 2008, coating extras will be adjusted downward by as much as $45 /nt ($2.25 cwt. or $50 /mt) for the heaviest coating on its lightest gauge product. Although no official base price decrease was announced by the company, buyers say that this move is just one way to rationalize the lower prices that Nucor has been offering for its galvanized products. Spot base prices are still lower than official list prices and are negotiable.

In general, buying activity has slowed tremendously from a couple of months ago, but of course some sales are still taking place. Most buyers are only looking at domestics right now as it is too risky to purchase offshore in this down-trending market. Buyers want short lead times and quick delivery, not to mention the right price.

Offshore offers, for the most part, are right around the domestic numbers, not competitive enough to initiate any import buying.

Offers from China for HDG 0.019" x 48" G90 (0.48 mm x 1.219 m) are ranging from $59.00 cwt. to $61.00 cwt. ($1,301 /mt to $1,345 /mt or $1,180 /nt to $1,220 /nt) FOB loaded truck West Coast ports.

For the same size and coating, Taiwanese offers are ranging from $62.00 cwt. to $64.00 cwt. ($1,367 /mt to $1,411 /mt or $1,240 /nt to $1,280 /nt) FOB loaded truck West Coast ports, although these offers are not piquing any interest as they are above domestic levels.

Chinese offerings for HDG sized 0.028" x 48" G40 (0.71 mm x 1.219 m) range from $51.00 cwt. to $53.00 cwt. ($1,124 /mt to $1,168 /mt or $1,020 /nt to $1,060 /nt) FOB loaded truck West Coast ports.

Offers from India for 0.012" by 40.875" G30 (0.30 mm x 1.04 m) have decreased by $3.00 cwt. ($66 /mt or $60 /nt) since our last report. Offerings are now in the range of $55.00 cwt. to $57.00 cwt. ($1,213 /mt to $1,257 /mt or $1,100 /nt to $1,140 /nt) FOB loaded truck Gulf ports.

For the same size and coating, Chinese offerings are also priced at $55.00 cwt. to $57.00 cwt. ($1,213 /mt to $1,257 /mt or $1,100 /nt to $1,140 /nt) FOB loaded truck West Coast ports.

Mexican offers for the same size and coating are also available. Offers from Mexico at the border crossing are ranging from $58.00 cwt. to $60.00 cwt. ($1,279 /mt to $1,323 /mt or $1,160 /nt to $1,200 /nt) as well, though for quick November deliveries. All other offers mentioned above are for January/February deliveries.

Comparatively, domestic prices for 0.012" by 40.875" G30 (0.30 mm x 1.04 m) vary from mill to mill, but can be found at a range of $60.00 cwt. to $63.00 cwt. ($1,323 /mt to $1,389 /mt or $1,200 /nt to $1,260 /nt) ex-mill Midwest.

On the galvalume side of the market, for 0.019" by 48" AZ55 (0.48 mm x 1.219 m) items, domestic offers are ranging from $62.00 cwt. to $64.00 cwt. ($1,367 /mt to $1,411 /mt or $1,240 /nt to $1,280 /nt) FOB mill. As for imports, both Taiwan and India are offering at the same range as domestic numbers, though both domestic and offshore mills are willing to negotiate.