US HDG prices still firming, but for how long?

US domestic HDG and Galvalume coil prices have continued to climb since our last report a week ago, although buyers are increasingly wondering when prices will peak. “We think we’re close,” a source said, noting that he believes that prices will peak in August or September.”

Others, however, are skeptical of that timing, and believe that prices could continue to move up into the fourth quarter. “Availability is still incredibly tight and for now at least, it appears as if mills are still in the driver’s seat,” a second source noted, adding that lead times are holding at “at least 10 weeks, if not longer.”

What’s worth keeping tabs on, however, is US domestic scrap prices. As noted last week, most SteelOrbis sources believe that August scrap prices could settle down by as much as $20/gt, if not sligltly more, during next month’s buy cycle. Another source noted that if scrap prices do trend downward, this could have a negative impact on finished steel spot market prices.

“The general idea is that if scrap prices come down, finished steel prices shouldn’t still continue to rise, but we’re not living in normal times,” he said. “Although I wouldn’t be surprised if [softer] scrap prices took some of the steam [out of still-firming HDG prices], I also wouldn’t be surprised if [HDG prices] kept moving upward. Trying to predict what’s going to happen with the market, and where prices will peak, is a fool’s errand.”