Most buyers believe that the bottom of the US hot dipped galvanized (HDG) market is very close, if not already here; however, the lack of demand continues to contribute to price decreases as we have entered the normally slow holiday season, which has been even quieter than usual this year due to the fallout of the financial crisis.
After months of significant weekly price declines, buyers began to see what appeared to be the bottoming out of the market over the past several weeks, as weekly prices continued to decline but in much lesser amounts and not as frequently as before. In addition to slowing price declines, the raw material for most flat rolled products, busheling scrap prices, began to rebound in November and have increased by approximately $120/lt in December. SteelOrbis assesses current busheling prices at about $260/lt in the East Coast. Ordinarily, rising scrap prices would be a great indication that HDG prices will begin to increase or at least stabilize. However, in these extraordinary times, the pricing trend for HDG and other flat rolled products still remains slightly down.
Despite all of the efforts by mills to cut production, most HDG prices declined over the past two weeks, since our last report, by about $2.00 cwt. ($44 /mt or $40 /nt). For now, regardless of how low prices drop, buyers still have little interest and are content to wait until at least the beginning of next year before conducting any significant business.
Domestic HDG coil spot prices are now ranging from approximately $30.00 cwt. to $32.00 cwt. ($661 /mt to $705 /mt or $600 /nt to $640 /nt) from most mills in the Midwest region. For sizes 0.019" x 48" G90 (0.48 mm x 1.219 m), domestic mills are now selling in the range of $39.00 cwt. to $41.00 cwt. ($860 /mt to $904 /mt or $780 /nt to $820 /nt) ex-mill Midwest.
Domestic mills are offering 0.012" by 40.875" G30 (0.30 mm x 1.04 m) sized items within the range of $43.00 cwt. to $45.00 cwt. ($948 /mt to $992 /mt or $860 /nt to $900 /nt) ex-mill Midwest. Import HDG offers to the US Gulf and West Coasts are ,on average, only a couple dollars less than domestic offers. This is could be an indication that while offshore countries continue to aggressively seek tonnage bookings, they are becoming less likely to drastically reduce prices just to strike a deal.
Offers from China and India for HDG 0.019" x 48" G90 (0.48 mm x 1.219 m) items have remained the same for three consecutive weeks and are ranging from $38.00 cwt. to $40.00 cwt. ($838 /mt to $882 /mt or $760 /nt to $800 /nt). China’s offers are duty-paid, FOB loaded truck West Coast ports, while India’s offers are duty-paid FOB loaded truck Gulf ports.
For the same size and coating, Taiwanese offers lowered their range by $2.00 cwt. ($44 /mt or $40 /nt) to $40.00 cwt. to $42.00 cwt. ($882 /mt to $926 /mt or $800 /nt to $840 /nt) duty-paid, FOB loaded truck West Coast ports.
Meanwhile, Chinese offerings for HDG sized 0.028" x 48" G40 (0.71 mm x 1.219 m) also declined by about $2.00 cwt. ($44 /mt or $40 /nt) over the last two weeks and are now ranging from $34.00 cwt. to $36.00 cwt. ($750 /mt to $794 /mt or $680 /nt to $720 /nt) duty-paid, FOB loaded truck West Coast ports.
New offers from China and India for 0.012" by 40.875" G30 (0.30 mm x 1.04 m) products remained within the range of $41.00 cwt. to $43.00 cwt. ($904 /mt to $948 /mt or $820 /nt to $860 /nt).
Mexican offers for the same size and coating at the border crossing also remained unchanged and are ranging from $42.00 cwt. to $44.00 cwt. ($926 /mt to $970 /mt or $840 /nt to $880 /nt).
On the galvalume side of the market, domestic offers for 0.019" by 41.5625" AZ55 (0.48 mm x 1.219 m) items declined by about $4.00 cwt. ($88 /mt or $80 /nt) from two weeks ago and are now ranging from $41.00 cwt. to $43.00 cwt. ($904 /mt to $948 /mt or $820 /nt to $860 /nt) ex-mill in the Midwest.
As for galvalume imports, all potential suppliers are offering, more or less, within the range of $41.00 cwt. to $43.00 cwt. ($904 /mt to $948 /mt or $820 /nt to $860 /nt) duty-paid, FOB loaded truck Gulf and West Coast ports. Both For Chinese and Taiwanese offers on 0.019" by 48" AZ55 (0.48 mm x 1.219 m) items, this price range represents a decrease of about $3.00 cwt ($66 /mt or $60 /nt) in the last two weeks.
India lowered its offerings from last week, for the same material, by about $1.00 cwt. in the last two weeks, and Korea kept their prices the same at the above range.
Preliminary census data from the US Steel Import Monitoring and Analysis System (SIMA) show that the total amount of import HDG products arriving in the US during October was 154,648 mt, which is 25,162 mt, or about 14 percent less than the 179,810 mt imported in September. The largest quantities of import HDG in the October period came from: China, at 68,246 mt; Canada, at 37,884 mt; Korea, at 11,517 mt; Mexico, at 11,275 mt; and Taiwan, at 10,935 mt.
The below chart shows the import volume of HDG imports over the last two years. Unlike most steel products, HDG import volumes remained elevated in 2008 with the exception of Q4. Year to date volumes will most likely end up lower than in 2007; however, statistics show that, overall, there were still decent import opportunities for HDG in 2008. 