Galvanized buyers see strong demand, but uncertainty lingers

The moderator opened the call by noting that many elements are on the rise.

“Mill prices are up; lead times are up; inquiries are up; shipments are up,” he said, adding that inventories have slipped somewhat.

The wild card, he thinks, is what the true demand is underneath the rapid steel buying as purchasers try to shore up inventories ahead of tariffs and price spikes.

“Is it more insurance? How good is really? What is true demand?” he said.

Separating out the protection buying

One buyer said they are seeing more panic buying ahead of price increases, but still sees strong underlying demand.

“We still view demand very favorably from a supply perspective,” he said. “It feels like things have loosened up a little bit. There was that initial rash of panic buying and things got really tight there for a while.”

“Even though the price is up substantially, we can get steel,” he said. “There’s no risk of allocation or not getting what we need.”

SMU’s latest price shows galvanized at $1,140 per short ton, up $40 week over week.

Another buyer said demand is there. But he also raised some concerns.

“I think there’s more demand out there, though, that has yet to be cut loose, that people talk about, than there really is available. So I’m concerned,” he said.

He commented that import pricing and high inventories could be a ceiling. And “Trump’s ability to change his mind on the fly is is going to cause some uncertainty as well.”

“I don’t think I’ve ever really lived through this, to where you’ve got such rapid inflation when you don’t really have a service center restocking cycle. And you’ve got raw material inputs moving but you don’t really have a demand picture, so there’s not either restocking demand or organic demand,” the second buyer said. “I think it’s going to be a new place for us all to be.”

Looking ahead

In an informal poll on the direction of prices, a solid majority expect prices for galvanized to rise in the next 30 days – 40% anticipate a more than $2-per-cwt increase and 40% expect a more than $4/cwt increase.

Over the next six months, the results were more mixed. About 38% expect prices to stay essentially flat; ~31% expect an increase of more than $2/cwt; and ~23% expect a jump of more than $6/cwt.

SMU participates in a monthly steel conference call hosted by HARDI and dedicated to better understanding 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 HARDI member companies.