HARDI: Strong Galv Demand Is Silver Lining Among Falling Prices, Lead Times

One HARDI member in the Rocky Mountain region noted that his company is seeing strong demand from both the residential and commercial construction markets, with a lot of projects, especially from the commercial sector, finally breaking lose from pent-up demand stemming from the Covid lockdowns.

Another HARDI member said inventory levels at his company remain solid. They are still seeing gaps in service center customers’ inventories resulting in continuing business for his company.

Michael Cowden, senior editor for Steel Market Update, speaking on the call said stable demand has been a silver lining amidst the falling steel prices and shortening lead times. He cautioned to watch for declining demand, as a rising number of respondents to SMU’s survey are reporting this and more pessimism regarding the second half of the year.

Early this year, before Russia’s invasion of Ukraine in late February, steel prices had begun to fall from historic highs and steel saw a buyers’ market. The war shifted the market into a sellers’ market in which mills were unwilling to negotiate and lead times extended. Now, “It’s more things are coming back to normal, to an extent…Maybe we’re just coming off this sugar high we were on after the war,” Cowden said on the call, noting a buyers’ market once again.

With shorter mill lead times, falling raw materials and steel prices, and plenty of new steelmaking capacity coming online, several HARDI members on the call said that it might be time for a mill (or mills) to take some capacity out of the sheet market.

“Now would be a good time for a mill to take out some capacity somewhere and draw a line in the sand somewhere… Just not one of the mills I buy from,” one HARDI member joked.

“We’re waiting to see which mill will get the arrow spun to them to take out capacity,” noted another member.

SMU’s average galvanized base price now stands at $1,500 per ton, down $60 per ton from $1,560 per ton last week and down $380 per ton from a mid-April peak of $1,880 per ton.

A survey of HARDI members on the call revealed that most anticipate falling prices for galvanized steel over the next six months, with 45% predicting prices to be down by more than $10 per cwt ($200 per ton) and 36% anticipating a fall of more than $6 per cwt ($120 per ton). Within 12 months, 41% predicted galvanized base prices will be $60-69 per cwt ($1,200-1,380 per ton), 23% said the base will fall to $50-59/cwt ($1000-1,180 per ton), 14% said $70-79/cwt ($1,400-1,580 per ton), and 18% said $80-89/cwt ($1,600-1,780 per ton).

Steel Market Update participates in a monthly steel conference call hosted by HARDI. The call is dedicated to a better understanding of the galvanized steel market. The participants are HARDI member companies, wholesalers who supply products to the construction markets. Also on the call are service centers and manufacturing companies that either buy or sell galvanized sheet and coil products used in the HVAC industry and are suppliers to the HARDI member companies.

By Laura Miller, Laura@SteelMarketUpdate.com