Once per month, HARDI sponsors a conference call for those HARDI members who are involved with the sale and distribution of galvanized steel to the HVAC and related industries. Steel Market Update participates in these calls along with wholesalers around the United States and Canada.
Since the last HARDI conference call we have seen a major move in the consolidation of the steel industry with Severstal North America selling their Dearborn and Columbus plants to AK Steel and Steel Dynamics. One of the service centers on the conference call said the sale is a “game changer” for the industry with an expectation that the domestic steel mills will be “more disciplined” in their approach to galvanized steel pricing.
The second item of importance was the issue of possible trade cases affecting galvanized steel suppliers. The expectation is for any new cases on cold rolled and coated would be placed by early September but no one is quite sure of any specific dates and the group could only rely upon speculation from its members.
A third item of concern was the recent run-up in zinc spot prices with the metal trading close to $1.10 per pound (prior to any premiums). This level is quite close to where the metal was trading when the existing coating extras were announced.
What we discovered out of today’s call was the wholesalers are reporting steel mill pricing as $20 per ton higher than it was one month ago. One wholesaler told the group, “We cannot buy anything at any mill at the same price we placed business one month earlier. Prices are $1 to $2 higher.” They went on to report July 11th as the cutoff date for their old pricing versus the new prices.
US Steel announced spot prices as being $25 per ton higher as of June 30th. Most of the domestic mills were quiet for the holiday week until Severstal NA floated $820 per ton cold rolled and galvanized base prices and a little later in the month Nucor verbally told their customers they were looking at moving up $25 per ton.
So, at least with the wholesalers who responded to questions in today’s conference call, prices are up at least $20 per ton.
Demand levels were discussed with many of the wholesalers admitting that business conditions have improved but “not overwhelming” in the Midwest. The East Coast wholesalers advised that business had slowed over the past few weeks but their customers were advising that they expected stronger business conditions later in the 3rd Quarter.
One of the service centers who supplies many of the wholesalers as well as service centers around the country reported their spot business as strengthening as service centers begin to develop holes in their inventories. “We are seeing holes in the service center industry. However, it has been slow to develop. Lead times are still short and distributors can sometimes wait for delivery.”
Transportation issues continue to hamper shipments due to a lack of drivers. The HARDI members were encouraged to work on their trucking relationships, how those bills are being paid, etc. “It doesn’t appear that this is going to improve anytime soon,” is what one of the service centers reported to the group.
SMU Note: HARDI = Heating, Air-conditioning, Refrigeration, Distributors International.
John PackardRead more from John Packard
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