Steel Mills

HARDI Wholesalers Expecting New Price Announcement on Galvanized

January 12, 2016

Steel Market Update participated in the monthly galvanized steel focused conference call sponsored by HARDI (*) earlier today. The wholesalers and manufacturers who participated in the call reported rising prices out of their domestic mill suppliers. Most reported the mills as having collected $20 to as much as $40 per ton since the increases were announced in December 2015.

The consensus of opinion was that the domestic steel mills would raise prices soon (call was prior to Nucor and NLMK price announcements).

A number of buyers reported flat fourth quarter business levels but, so far January has gotten off to a very good start.

A number of the buyers reported that their companies bought heavily in December assuming prices would begin to move higher from there. One of the Midwest based wholesalers reported his company as being in the midst of negotiations on more tons and, “I do not expect to pay the full increase [original $40 increase].” He went on to say, “I expect another increase announcement shortly.” He was proved right when Nucor and NLMK USA announced price increases within a couple hours of the conference call ending.

Further west a wholesaler told the group that his supplier mills were “waiting” and holding off on doing anything through the end of the week.

Those HARDI members who buy some foreign steel reported prices as being $20 to $30 per ton ($1.00/cwt-$1.50/cwt) higher than the offers seen just prior to the Christmas holidays. We were told that the “Indians are back in a big way…” referring to the CORE (corrosion resistant steels where antidumping & countervailing duty preliminary determinations and critical circumstances have been completed by the US Department of Commerce) and Indian mills received duty rates of approximately 7 percent. As one foreign buyer put it, “The Indian mills don’t seem too concerned.”

In Canada the manufacturers and wholesalers were complaining about the exchange rate between the Canadian dollar and that of the United States. The Canadian dollar was referenced as being worth $0.70 compared the U.S. dollar ($1.41 CND to buy $1.00 US). This is the lowest level seen for more than 13 years.

The Canadian customers are paying their suppliers for steel in U.S. dollars which blunts some of the advantages they may have on other costs.

One wholesaler pointed out to the group that base prices for galvanized are $10.00/cwt lower than what we saw this time last year. So, tonnage may be up but sales dollars are down for most wholesalers.

SMU was asked about possible price increases based on a comment made in an article last week attributed to a domestic mill. At that time the expectation was that a price increase announcement would be made within a week. We told the group that the mills had just made plate price increase announcements on Monday and our expectation was that flat rolled announcements would be on their heels. The last time increases were made the plate announcements were made shortly after flat rolled.

We also advised that scrap prices were up by various amounts around the market and higher scrap prices were good for the steel mills efforts to increase flat rolled pricing.

HARDI = Heating, Air-conditioning, Refrigeration, Distributors International