HARDI: Galv Demand Slowing as Pricing Drops

A executive at a large service center said demand was inconsistent. Demand from contractors is up even as demand from other services centers is down. On balance, though, things are busy enough that there are holes in inventories.

As for inventories, some on the call said that they might not be too out of balance. While some had more inventory than they would like, others said they were running lean. And still others noted that customers were sitting on the sidelines as prices fall – which makes it hard to determine what demand truly is.

SMU in recent surveys has found that about 40% of respondents reported declining demand. Prices have also been falling. Galvanized base prices peaked at $1,880 per ton ($94 per cwt) on April 19 and have been falling ever since. SMU’s galv base price was at $1,270 per ton as of Tuesday, July 26. That’s a decrease of $610 per ton since mid/late April – or a decline of $44/ton per week.

“We’ve really seen sentiment come down too,” said Michael Cowden, senior editor for Steel Market Update.

And it looks like mills remain willing to negotiate. According to a recent SMU survey, 90% of respondents reported that mills were willing to negotiate on galvanized prices. The figure was similar for hot rolled and cold rolled.

HARDI members said commercial construction has seen better demand than residential construction. And some think there could be a change in direction of price before the end of September.

The results of a snap poll conducted at the end of the call revealed that 50% of participants said they thought galvanized prices would be down more than $6 per cwt in the next six months. And 14% said prices would be down more than $10 per cwt.

Where will price be a year from now? 36% predicted that galvanized prices would be in the range of $50-$59 per cwt, 25% chose $60-69 per cwt, and 21% said prices would fall somewhere in the $70-$79 per cwt range. Small minorities thought they would be above or below those ranges.

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 Becca Moczygemba, Becca@SteelMarketUpdate.com