US HDG market outlook pessimistic in short term

Previously announced price increases have become obsolete within the US domestic flat rolled market and coated flat steel spot prices have fallen across the board. Mills have now lost the small portion of the February-announced $2.50 cwt. ($55/mt or $50/nt) price increases on flat steel products they attained in early March. The increase announcements are having essentially zero impact as customers are more interested in cutting inventories rather than stocking up. Demand levels are still stable, according to SteelOrbis sources, but constrained lead times and expectations of further price deterioration have contributed to buyers making purchases only when immediately needed.

Since last week, US domestic hot dipped galvanized (HDG) and Galvalume base prices have dropped by $1.00 cwt. ($22/mt or $20/nt) to $34.00-$35.00 cwt. ($750-$772/mt or $680-$700/nt) ex-Midwest mill, with spots for corresponding extras falling in tandem. Order entry on a spot basis is too minimal for mills to be able to refuse orders at the moment, and so spot prices have more room to fall in the coming weeks, especially following a $20/lt drop in scrap prices this month. Tight inventory management is also likely to put continued downward pressure on spot prices. But, as mentioned, demand is decent and is expected to keep the price softening measured.