US HDG market seen bottoming on shrinking supplies, rising scrap costs

Little has changed in the US hot dip galvanized (HDG) market in the past week as domestic mills are still trying to fill their June order books and offshore mills remain largely absent from the market.

Domestic HDG prices have trended sideways since last week, and domestic flat rolled prices, in general, seem to have bottomed out for the time being, as the May up-tick in scrap costs has eliminated mills' incentive to lower prices further. Furthermore, demand appears to have also bottomed out, and imports are still a non-threat. Although US flats mills are still running at less than half of capacity and there is no big increase in flat rolled demand on the horizon, market conditions are not expected to continue to deteriorate from their present level.

In fact, over the summer, provided that imports stay out of the market and scrap prices don't collapse, US flat rolled mills may even attempt a slight price hike to take advantage of the low inventories, perhaps in sync with busheling scrap prices. Still, given the continued weak demand due largely to the ongoing reduction in automotive production, it seems unlikely that prices could start to firm up before the second half of the third quarter.

Domestic HDG base prices have not moved from last week and continue to range from $22.00 cwt. to $24.00 cwt. ($485 /mt to $529 /mt or $440 /nt to $480 /nt), while both 0.019” x 48” G90 (0.48 mm x 1.219 m)  and  0.012” x 40.875” G30 (0.30 mm x 1.04 m) offers still range from $30.00 cwt. to $32.00 cwt. ($661 /mt to $705 /mt or $600 /nt to $640 /nt) ex-Midwest mills.

Domestic Galvalume base prices are found at a range of $23.00 cwt. to $25.00 cwt. ($507 /mt to $551 /mt or $460 /nt to $500 /nt), with 0.019" x 41.5625" Gr80/AZ55 (0.48 mm x 1.219 m) still ranging from $32.00 cwt. to $34.00 cwt. ex-Midwest mills.

On the import side there is still hardly anything happening other than some scattered niche product bookings as the US market is not attractive for foreign mills right now and US customers are able to get faster, more competitively-priced shipments from domestic mills. Furthermore, a potential antidumping filing by US mills on coated product imports from China and other sources is still looming over the market. There are still some import offers out there, though they have been becoming increasingly uncompetitive in recent weeks.

India, a common HDG import source for the US, is currently not offering, as they have no shipping until September, while another Asian import source, Taiwan, is raising their prices in line with their increase in domestic hot rolled coil prices. Meanwhile, China and Korea remain uncompetitive and largely inactive in the US market as they want to avoid inclusion in the trade case that US HDG producers are rumored to be putting together. Generally, HDG import prices in the US have remained steady in the past week after rising earlier in the month.

Most  offers of 0.019” G90  from Taiwan for the US continue to range from $35.00 cwt. to $37.00 cwt. ($772 /mt to $816 /mt or $700 /nt to $740 /nt) duty-paid, loaded truck in US West Coast ports, while Taiwanese 0.012”  G30 offers are still ranging from $37.00 cwt. to $38.00 cwt. ($816 /mt to $838 /mt or $740 /nt to $760 /nt) duty-paid, loaded truck, in US West Coast ports.

Korean HDG offers of both 0.019” G90 and 0.012” G30 continue to range ranging from $34.00 cwt. to $36.00 cwt. ($750 /mt to $794 /mt or $680 /nt to $720 /nt) duty-paid, loaded truck, in US West Coast ports.

China is still offering at the same range as last week, with 0.019” G90 offers ranging from $32.00 cwt. to  $34.00 cwt. ($705 /mt to $750 /mt or $640 /nt to $680 /nt) in the Gulf, and 0.012” offers ranging from $34.00 cwt. to $36.00 cwt. in the Gulf.

Mexico is still the most competitive import source for 0.012” G30 in terms of prices, with available offers still found at range of $33.00 cwt. to $35.00 cwt. ($728 /mt to $772 /mt or $660 /nt to $700 /nt) at the US border crossing. However, there are very few Mexican offers out there, as Mexican mills, which are seeing a decent amount of bookings in their home market, are said to be mostly booked through July.

On the Galvalume end, Taiwanese offers of 0.019" AZ55 still range from $35.00 cwt. to $37.00 cwt. on the West Coast, while Korean offers are still found at a range of of $33.00 cwt. to $35.00 cwt. on the West Coast. Mexican Galvalume offers are found at a range of $33.00 cwt. to $35.00 cwt. at the US border crossing.