US import HDG market at a crossroads

While essentially all futures offer prices to the US were expected to continue their weeks-long price decline, recent price increase announcements in the US domestic market could alter offshore mills' plans. Offer prices for hot dipped galvanized (HDG) and Galvalume coil futures from China, India and Taiwan have been on a perpetual downtrend for about two months for a multitude of reasons, but primarily due to falling raw material prices as well as weak finished steel demand in the offshore mills' local markets, in addition to rapidly deteriorating US domestic coated flat steel spot prices. As a result of the US domestic trend, import activity has been minimal throughout April and May and Chinese and Indian mills in particular were slowly lowering offer prices as they searched for a level that would reignite import activity.

Just a week ago, HDG 0.012"x40.875" G30 and 0.019" x 48" G90 offer prices from China and India were anticipated to fall at least another $0.50 cwt. ($11/mt or $10/nt). However, in that time, US domestic mill-announced $2.50 cwt. ($55/mt or $50/nt) price increases have resulted in not only more domestic purchasing activity, but has also allowed spots to rise as well. While the sudden improvement in the US domestic market hasn't translated to an immediate rush to buy imports, trader sources tell SteelOrbis that the offshore mills could begin to rethink their previous plans to drop prices and instead keep current offers as they are, or even try for an increase if US domestic spot prices continue their upward climb.