US HDG mills compete for market share

US domestic hot dipped galvanized (HDG) mills have been making more pricing adjustments in order to fill order books as of late, on the back of meager demand levels.

In order to keep US domestic base prices for HDG and Galvalume as steady as possible, mills continue to reduce the costs of coating extras, in some cases substantially, to get buyers to commit to an order. "It's a battle of which mill can offer you the best deal," one Southeast distributor told SteelOrbis. With demand levels as slow as they have been in the last two months--and especially in the last few weeks--all domestic mill HDG spot prices with coating extras have become increasingly negotiable.  And as mentioned in previous reports, freight charges from mills to customers are being cut as well, or in some cases even entirely absorbed, as mill order books for HDG remain largely in mid-August.

The decline in domestic HDG spot prices will likely continue through the end of July under the continued downward pressure from overcapacity and lackluster demand in the domestic hot rolled coil (HRC) and cold rolled coil (CRC) market (primarily from the extremely slow-moving construction sector). The trend past July (for September order books) is still cloudy, and although continued softening is certainly possible, market participants indicate that buyer inventories are being drained, and will need to be replenished sooner rather than later, which could end the slide of HDG spot prices.

In any case, the range for US domestic HDG base spot prices has widened in the last week, falling $1.00 cwt. ($22/mt or $20/n) on the low end to $40.00-$42.00 cwt. ($882-$926/mt or $800-$840/nt) ex-Midwest mill. Meanwhile, HDG 0.019"x48" G90 prices have dropped $1.00 cwt. on the spot market into the range of $51.00-$52.00 cwt. ($1,124-$1,146 or $1,020-$1,040/nt) ex-Midwest mill, and HDG 0.012"x40.875" G30 spot price ranges have not moved in the last week. However, deals have been heard as much as $1.00-$2.00 cwt. ($22-$44/mt or $20-$40/nt) under both ranges. Galvalume base spot prices are neutral as compared to last week at $41.00-$42.00 cwt. ($904-$926/mt or $820-$849/nt) ex-Midwest mill, but Galvalume 0.019x41.5625 Gr80/AZ55 spot prices have slipped $1.00 cwt. on the high end.

Offshore, mills are making deals where they can to get US orders as well, but there is almost no activity to report. Additionally, Chinese mills have been looking to increase their HDG export prices to the US, as Chinese domestic HDG prices have been rising in the last couple weeks. And if Chinese mills do raise their prices for the US, it would rapidly extinguish any remnants of US import interest that still remain.

**DDP loaded truck delivered into Houston

***DDP loaded truck in US West Coast ports