Steel Products Prices North America

Light Gauge Galvanized Buyers Struggle to Find New Suppliers

June 7, 2016

For many years, SMU publisher John Packard sold ultra light gauge galvanized steels (.019”-.010”) into the furnace pipe manufacturers across the United States and Canada. This product is one that is not championed by the domestic steel industry as the domestic steel mills would rather run thicker steels (more tonnage per hour through their mills) and larger coils (many of the manufacturers use small PIW coils).

Over the years the industry has been dominated by the steel mills in India such as Jindal and Uttam Galva. With the US Department of Commerce ruling against the Indian steel mills in their Final Determination on antidumping (AD) and countervailing duty (CVD) regarding corrosion resistant steels, all of the Indian steel mills except Uttam have backed away from the U.S. market.

Our sources are advising us that Uttam, with their U.S. subsidiary, is continuing to sell into the U.S. market and to deal with the approximately 8 percent deposit required against possible duties owed. However, the tonnage they may dedicate to the U.S. market will not cover the needs of the furnace pipe and other ultra light gauge galvanized users. Uttam Galva, which is a privately held company, also reported that their losses have exceeded their net worth (see India article in tonight’s issue).

So, what does that leave for those buyers of light gauge galvanized steels? Domestically, the mills mentioned most often as suppliers of the .012” type products are California Steel, CSN (Terre Haute) and The Techs. Other mills are capable of producing the product but may be reluctant to. These include NLMK Sharon Coatings, Nucor Berkeley, Wheeling Nisshin and ArcelorMittal Dofasco.

We are being told that the other countries that are entertaining light gauge galvanized steel offers include Vietnam, Pakistan, Turkey, Brazil, Taiwan, South Africa, Japan, Mexico and the UAE. However, none of the mills located in these countries are able to match the production of the Indian and Chinese steel mills which had been supplying probably 80 percent of the very light gauge markets. Some of the mills are dealing with recent production issues (CSN, Brazil), countries like Japan are very careful to not disrupt domestic pricing and some mills are concerned about future possible trade actions and would prefer to put their material elsewhere.

Traders told us that current price offers on .012” are running from $40.80/cwt (UAE) to as high as $44.00/cwt. Most offers are in the $42.00/cwt-$44.00/cwt range.

Steel Market Update spoke with a number of traders and furnace pipe manufacturers regarding sourcing for the balance of the year. The manufacturing companies told me they have been struggling to meet their short term needs as supply was disrupted with a number of cancellations from countries like Turkey and Italy. Most of the inventories that existed unsold at the ports or in the large galvanized warehouses have been sold, some going for as much as $60.00/cwt.

One manufacturer told SMU earlier today when it comes to these countries and steel mills the issue they face is, “Who is in it for the long term?” That is indeed an interesting question as multiple traders offer steel from some, as of yet, unproven suppliers. The proof will be who sticks with their customers when prices and the U.S. dollar slide?

We understand that a number of the steel mills affected by the trade suit will file an appeal with the US Department of Commerce but that could take many months, if not more than a year, to resolve with no guarantee of the results.

We do have one more step before the duty rates are locked in. That would be the Final Determination of “injury” by the International Trade Commission in July.