HARDI: Prices High, But HVAC Demand Still Strong

Rising galvanized steel base prices flattened around $1,000 per ton as the market waited to see what President Trump would do ($1020 per ton as of this evening according to the SMU GI index). Now that there is more visibility on the trade front, steel prices are likely to move up again. SMU’s Price Momentum Indicator is pointing Higher, Packard said. Yet none of the HARDI members on the conference call expressed any concern about demand in their market, which is closely linked to building and construction.

“Midwest demand is still very strong,” said one distributor of galvanized steel products. “There was some slight softening in prices in May until countries lost their tariff exemptions. Mills and service centers seem to have a bit more of the negotiation power now. We are buying very conservatively at this point, riding the waves as they come.”

“I’ve heard no negative comments on projects being delayed or canceled, but I would not want to be in the building business right now,” said another HARDI member, commenting on the market’s uncertainty.

“I am seeing shops busier than ever. Larger contractors are loaded up with work through the end of the year. There’s no talk of jobs being put on hold,” said another distributor of HVAC products. He did express some concern about the financial health of smaller subcontractors who can’t pass along the entire price increase to their customers.

“We are confident in the market. One barometer is cranes in the air. We are seeing them everywhere. We are very busy,” agreed another service center in the Southeast. His company’s business model to maintain relatively high inventory levels has paid off in a market where customers are concerned that tariffs will restrict imports and cause shortages of steel. “The psychological impact of possibly not getting enough material has reduced the resistance to higher prices,” agreed another distributor.

Some are surprised that prices are not even higher. One galvanized steel buyer said he still sees the occasional deal being offered at the mill level. “Mills don’t want to appear as if they are gouging,” he said. Added one of his peers: “Usually, steel does not make the front page. Steelmakers are aware they might appear greedy” if they try to exploit the tariffs too aggressively.

The price of zinc has declined from a yearly peak of $1.64 per pound to the current price around $1.41. “But there are signs of some upward pressure on zinc. Don’t expect any decreases in mill extras any time soon,” Packard added.

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 who are wholesalers, service centers and manufacturing companies that either buy or sell galvanized sheet products used in the HVAC industry.