HARDI Members on Sidelines, Cautiously Watching Market

Since that last meeting, however, steel mills have announced a round of price increases. On June 14, U.S. Steel increased prices by $2.50 per cwt ($50 per ton). On June 16, Nucor announced its own $50-per-ton increase, with Cleveland-Cliffs and ArcelorMittal following with the same on June 20.

HARDI highlighted that scrap prices are down another $50 per gross ton in June, after a $25-per-gross-ton drop in May. Spot prices for hot-rolled sheet are also down $10 per cwt since the last meeting, and down 30% from levels one year ago.

“We won’t really see evidence of the increases sticking for another week,” said Michael Cowden, SMU’s managing editor, speaking on the Zoom meeting. “If it succeeds, if it gets people to move off the sidelines and start buying again, that’s when you’d start seeing lead times moving out,” he said.

Lead times for all products have been slipping lately. “Lead times are going in. If you get into three weeks on average for hot rolled and five weeks on average for cold rolled and coated, that’s similar to what we saw last year,” said Cowden.

One HARDI member from the South mentioned he is still seeing a little extension on lead times. “If it does pick up, it would make it worse for everyone,” he said.

The same member noted that demand had dropped about 20% in June. Additionally, he is seeing more players that aren’t normally involved in the HVAC section, come in with aggressive numbers.

A member from the Midwest said there has been a lot of tightening up at the mills and service centers. The amount of people offering discounts has decreased and the company is running a leaner inventory. However, price increase announcements have not called them off the sidelines to add inventory. The supplier has primarily domestic buyers.

In the Southeast, demand for June has been good, a source on the call said. On the downside, margins have taken a beating with higher costed material from May and June now hitting the books. Organizations are hopeful that the price announcements will put a stop to the slide, but a representative from the area said lead times have yet to move out.

Out West, lead times have been shortening in addition to increased capacity, a participant from that region said. Some parts of the West are more affected by competition than others. Overall, inventory is lean but companies are still in decent shape.

An end-of-meeting poll asked participants where galvanized prices would be in the next 30 days. 36% said they see prices remaining flat, while 25% said they see prices dropping more than $2 per cwt. Another 18% voted on prices increasing more than $2 per cwt.

The outlook on where galvanized prices are headed in the next six months was closer, with 29% of people saying it would be down more than $6 per cwt. 29% also said that prices would be down more than $2 per cwt. 25% believe prices will remain flat.

In 12 months, 61% of participants think the galvanized base price will be $50-59 per cwt. 25% think prices will increase to $60-69, and 11% see prices dropping to $40-49 per cwt.

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 Becca Moczygemba, becca@steelmarketupdate.com