US HDG prices weaken as lead times remain constrained

As cautious buying patterns persist, buyers in the US domestic hot dipped galvanized (HDG) coil market are waiting for clear, positive market signs. Demand levels within the US domestic flat rolled market are steady; major end use sectors for the coated flat steel market are generally reporting strong activity. However, short lead times (less than four weeks in some cases) on HDG and Galvalume coil products continue to keep purchasing activity strictly on an as-needed basis, especially as raw steel production rates appear to show no signs of dropping significantly in the near future.

Sources lament that mills' announcement two weeks ago about no longer accepting discounted CRU deals is not enough to boost the domestic flat rolled market in the near term, and only a major change in the market--either a production outage or sudden demand surge--will truly allow prices to firm. Service center buyers indicated that they are searching for a sign to give them the confidence to buy larger orders, which could in turn give mills the confidence they need to "turn down cheap, money-losing orders." Until then, HDG and coated prices will remain soft, as base prices fell to $32.50-$33.50 cwt. ($716-$739/mt or $650-$670/nt) ex-Midwest mill in the last week.