HARDI: Demand Remains Strong Despite Elevated Prices

Galv prices had been trending downward since peaking last September at $2,185 per ton ($109.25/cwt). They bottomed out at $1,420 per ton on March 1. Then prices suddenly reversed course and jumped $460 per ton higher over the following several weeks because the war disrupted raw material supplies from the CIS region.

“The market did change very, very quickly with Covid. But it changed even more quickly with the war in Ukraine. We saw prices and lead time snap back up, but both have moderated a bit more recently. So, again, prices remain at high levels but are mostly flat over the past couple of weeks – and lead times are not extending as much as they were,” SMU Senior Editor Michael Cowden said on the call.

Steel Market Update data put the average base price for galvanized steel at $1,860 per ton as of Apr. 26, slipping $20 per ton over the past week, and potentially leveling off.

These pricing dynamics are not specific to galvanized, Cowden added, noting that a trend of stabilizing price levels and lead times is occurring across all sheet products. The question, he suggested, is whether the market is at an inflection point with prices soon to turn down, or whether prices remain in a holding pattern.

“The spread between galvanized base and hot-rolled coil price got up to $550 per ton at the beginning of the year,” Cowden added. “It is presently at $400 per ton, high in absolute terms as it relates to historical data, but not unreasonable when you take into consideration the historically high steel prices.”

Based on the following comments from the HARDI members on the call,  the flurry of buying has come moderated – but demand remains strong:

“Demand has been strong for us in the first four months of 2022, and with current customer backlogs, we expect demand to remain strong for the balance of the year. We did see a big rush to buy in March and April with the price run-up, and much of that activity has slowed. But it doesn’t seem like we’ve pulled a lot of demand forward.”

“Prices have seemingly paused, but this pause comes after a $23.8/cwt increase over a five-week period. Zinc extras have also put upward pressure on pricing.”

“Inventories are in good shape – lead times have moved out, maybe two to two-and-a-half weeks … but they have stabilized since. We initially saw some project delays, but those were short-lived.”

“Demand is good, inventory levels are good. Prices have kind of peaked. It seems that the market is at a good stable point.”

“I don’t necessarily just like echoing what everyone else is saying, but our demand is strong, particularly in March and April – and inventories are balanced.”

“The war in Ukraine and the potential fallout on raw materials was initially a shock to the market. But the market seems to be adjusting as best it can.”

“Two months ago, we were asking how far it is going to fall. Last month, it was how high will it rise. And now it looks like there is a little bit of a pause.”

One HARDI member likened the current, ever-shifting price movement to the famed Twilight Zone Tower of Terror at Disney’s Hollywood Studios in Orlando, Fla. “It is kind of like the Tower of Terror. They change the route on the ride every single time – so we are at the point where we do not know if we are going to down, if we are going up, or if we are holding. We are just kind of in the middle waiting for the next move. … We’re in the middle of the Tower of Terror.”

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 David Schollaert, David@SteelMarketUpdate.com