Steel Mills

HARDI: Strong Demand Continues Even As Galv Prices Decline

Written by Laura Miller

Distributors who sell galvanized steel products continue to see balanced inventory levels and strong demand. In their monthly conference call earlier today, members of the Heating, Air-Conditioning & Refrigeration Distributors International (HARDI) expressed optimism even as steel prices are on the decline.

Russia’s invasion of Ukraine helped reset the steel market, explained Steel Market Update Senior Analyst David Schollaert on the call. “That dynamic has stabilized itself,” he said, and things are “falling back in line with where the market was at the beginning of the year.”.

SMU’s price assessments for both hot-rolled and galvanized sheet spiked after the war began but have come down in recent weeks. “War made things bounce, now there’s a correction to it,” Schollaert said.

The overall market still very bullish. But Schollaert told HARDI members to expect steel prices to edge back down toward where they were before the war. The big question remains: Just how far and how fast will they fall?

“Mill attitudes have changed in the last couple weeks,” one HARDI member said. “They’re begging for an order at any price today.”

Galv prices have dropped $9.00/cwt since HARDI’s last call a month ago, with the current spot price around $85.00/cwt – about the same as what it was one year ago. Zinc prices have also dropped from a record high of $2.04/lb to around $1.70/lb currently. They are seeing lead times in the range of four to seven weeks.

In the survey at the end of the call, members were asked where they think galv prices will be in the next 30 days, six months, and 12 months. More than half of the members present predicted prices would be down more than $4/cwt in the next 30 days and 44% said they’ll be down by more than $6/cwt. More than a third of members predicted prices would be down to $60-69/cwt in the next six months, and a third of members thought prices would be $70-79/cwt within 12 months.

When it comes to demand, all HARDI members on the call agreed that demand remains solid.

“Demand remains strong for us. There was a rush to the order books in March and April. … We were expecting somewhat of a hangover effect in May, but we really haven’t seen that. Steel sales have been resilient in May. Demand overall seems that it will be good for all of 2022,” said another member.

“We’re seeing solid demand,” said a member in the HVAC business. “Our supplies are pretty level across the board and inventories are on par with where we think they should be.”

A service center member said, “We’re seeing things steady with inventory levels solid at just over two months. … Overall, we’re steady, we’re good.”

We’re a month away from the end of the first half of 2022, and this year we’ve already seen galv prices drop by $30/cwt, then jump by $25/cwt, and now fall again by $10/cwt and possibly more. “The steel market is not for the faint of heart,” one HARDI member noted.

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 Laura Miller,

Laura Miller

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