Steel Products Prices North America

Light Gauge Galvanized Import Prices Should Begin Moving Higher

October 13, 2016

Trading company sources have been telling SMU to expect foreign flat rolled steel prices, especially light gauge galvanized prices, to rise in the coming weeks. Traders are advising SMU that slab and hot band substrate prices have been rising around the world thus increasing the cost for many conversion mills to produce cold rolled and galvanized steels.

The issues facing foreign steel mills in their home market is two-fold: first substrate prices for slabs and hot rolled coil are rising. Second, prices in their home markets have, in many cases, also been rising, limiting the spread between their domestic markets and export pricing. No one wants to be accused of “dumping” so if they can sell the steel for higher numbers in their home markets why take the chance on the U.S.?

A third reason for higher prices has to do with the essential elimination of Vietnam as a cold rolled and galvanized supplier (at least temporarily) due to the circumvention charges filed by the domestic (USA) steel mills. This has helped to tighten potential supply from foreign sources.

One of the west coast mills told SMU that they believe there may be as many as 60,000 tons of Vietnamese order cancelations due to the circumvention suit. We have not been able to independently verify the number of tonnage canceled but looking at the galvanized tonnage shipped from January through September 2016 Vietnam GI exports averaged 24,700 net tons per month (September license data was for 54,000 net tons). So, the number could very well be in the 60,000 ton range or higher.

Traders have told SMU that the current price levels on .012” G30 galvanized material range from a low of approximately $38.00/cwt up to $41.00/cwt. The cheapest prices are currently being offered out of the United Arab Emirates (UAE) with at least one trading company lamenting, “There is no reason for it [low UAE numbers] all they are doing is destroying inventory values.”

Other sources for ultra light gauge galvanized include Uttam out of India (all of the other Indian mills have AD/CVD duties that prevent them from participating in the U.S. market). Uttam has decided to pay the duties and continue to ship. We are also seeing light gauge galvanized coming from South Africa, Taiwan, Pakistan, Turkey (although we are being told the Turkish mills are holding back offers right now) and Mexico.

A trading company that represents one of the mills discussed above told us that their prices would have to rise due to the higher priced hot rolled substrate being used by their mill as well as Vietnam being taken out of the market and Turkey voluntarily taking itself out of the market for the time being.

Ultra light gauge buyers should be aware of the changing international situation which is poised to raise prices for U.S. customers.