US HDG replicates trend of HRC: down one week but flat the next

Following in the steps of their hot rolled coil (HRC) and cold rolled coil (CRC) counterparts, US domestic hot dipped galvanized (HDG) transaction pricing has remained neutral since our last report a week ago, as buyers and service centers continue to evaluate as to what level inventories can be effectively trimmed.

Interesting to note is that data reported in the most recent Metals Service Center Institute (MSCI) report indicates that while steel shipments for flat rolled products during the month of June reflect a month-on-month increase from May (2,055 nt versus 1,857.2  nt), it also indicated that inventories have actually increased by about 8 percent, reemphasizing the magnitude of overproduction.

Additionally, it's also important to point out that the most recent report by the US Census Bureau and the Department of Housing and Urban Development; privately-owned housing starts in June were 5 percent below forecasted estimates, while single-family housing starts reflected a 0.7 shortfall of expectations. 

All in all, end-use demand for coated products is still relatively flaccid, and as long as production is mismatched to order levels, continued softening in transaction pricing will remain the trend.

Looking offshore, India has implemented a temporary time-out in terms of offerings, having recently announced that August orders are now closed.  However, they have indicated that September pricing will be available in the near future.   More interestingly, though, is the recent aggressiveness of Chinese sellers, who have, according to industry sources, started pressuring traders to "either buy now at this price or buy next week when we raise it".   Although it's unsure if this is more of a sales tactic as opposed to a statement of fact, buyers aren't really biting.