US HDG market: Mills offering discounts to pad order books

Sources close to SteelOrbis have said that US domestic flat steel mills’ desire to gain orders and stretch out lead times has led to discounts within the domestic HDG coil market.

“We booked [base HDG coil] at $31.50 cwt. ($694/mt or $630/nt) ex-mill without even trying,” a source said. A second source said that while they also received a discount from mills’ desired $34 cwt. ($750/mt or $680/nt) ex-mill rate, they “paid closer to $32 cwt. ($705/mt or $640/nt) ex-mill.”

“I don’t think we’re at the bottom yet, but I think we’ll be there before the end of the month,” he said. “Once mills’ order books start to get healthier, I expect we’ll see another 1-2 rounds of price increases, and the pendulum will start to swing back in the other direction.”

Current lead times are trending at approximately 5-7 weeks.

Sources agree that pricing is likely to experience a “two steps forward, one step back” trend for the foreseeable future, and it’s believed that any price firming that does take place will be incremental. Automotive production seems to be the brightest spot in terms of market demand, sources said, although there’s still concern that a resurgence of COVID-19 cases in the US has the potential to impact the market.

On Friday, the mayor of Atlanta announced the re-implementation of that city’s shelter-in-place order. On Sunday, it was reported that the mayor of Houston is in favor of a two-week shutdown in response to that city’s spike in infection rates. Today, the governor of California ordered the closure of indoor business throughout the state, including museums, gyms and restaurants due to a marked increase COVID-19 hospitalizations and test-positive rates. 

Current domestic HDG and Galvalume spot market prices are listed in the chart below.