Steel Mills
Galvanized Wholesalers Report More Availability & Sideways Pricing
Written by John Packard
June 21, 2016
Once a month Steel Market Update participates in a steel conference call hosted by HARDI. The wholesalers associated with HARDI supply galvanized steel and other products to the mechanical contractors involved in residential, multi-family, light commercial and commercial construction around the country. The purpose of the call is to better understand the galvanized steel markets so each wholesaler is able to understand the factors affecting their local markets.
In today’s’ call the HARDI wholesalers reported being able to purchase more steel at similar prices as one month ago. They reported controlled order entry as being a thing in the past (allocation) and that they were able to buy all of the material needed.
Market prices from their domestic mill suppliers have peaked and most of the wholesalers reported prices as moving sideways.
Two service centers that were on the call reported their spot business as quite strong as the longer lead times have left other service centers with holes in their inventories. Both galvanized distributors reported their companies are being careful not to deplete their inventories which service their normal customers as well as the service center spot markets.
There were a number of comments made about selling off lower priced inventories and then having to replace the steel with higher priced steel. One wholesaler related a story regarding a service center salesperson who spoke to one of the wholesalers. The distributor reported his company as having solid sales due to their ability to offer low prices due to their cost of goods on the floor. The salesman was lamenting that their costs were about to rise due to new higher priced inventory due into their facility in the coming days and weeks. Obviously, this one company was selling off of their costs of goods on their floor and not off of replacement cost.
Demand levels were referenced as being “good” or “decent” although not necessarily as strong as what was seen over the past few months. One wholesaler told the group, “Demand is normalizing. We had two to three good months and there may have been some panic buying [by their customers]. Demand is not falling off a cliff and we are working to right-size our inventory. It doesn’t make sense to blow it out now and have to pay higher prices for replacement.”
When asked about foreign steel offers we were told offers were “quiet” and there was very little being offered into their markets.
HARDI = Heating, Air-conditioning, Refrigeration Distributors International
John Packard
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