HRC-galvanized price gap edges higher

SMU’s average HRC price increased $5/st last week to $800/st, recovering slightly from the seven-month low of $785/st reached in mid-September. Prices today are 5% lower than they were three months ago and 10% below rates seen six months prior.

Meanwhile, galvanized (base) prices eased $10/st week over week (w/w) to $925/st. Unlike HRC, galvanized prices have continued to drift lower in recent weeks, a trend that has persisted since July. Prices have fallen 6% over the past three months and are 14% below six-month-ago levels.

Figure 1 shows the pricing relationship between these two products since 2023. Use our Interactive Pricing Tool for more ways to analyze SMU data.

Galvanized premium shrinking

Currently, galvanized commands a $125/st premium over HRC (Figure 2, left). The delta between these products has not been this low in more than two and a half years. In March 2023 we briefly saw a historically low spread of $100/st, a short-lived anomaly in a surging market when HRC prices rose considerably faster than other products. Before that, we’d have to go back to December 2020 to find similarly low spreads.

Around this time last year, spreads were significantly higher, ranging from $180-210/st. Over the past 12 months, the spread has averaged $173/st. Historically, pre-pandemic spreads generally ranged from $85-220/st throughout the 2010s.

Another way to compare these products is to look at the galvanized premium as a percentage rather than a dollar value. The right graph in Figure 2 shows the hot-rolled/galvanized price spread as a percentage of the HRC price.

The percentage premium tells a similar but less dramatic story. As of last week, it stood at 16%. This rate is tied with two other weeks this year for a two-year low. It has averaged 22% over the past 12 months. This time last year the premium ranged from 27-34%, having eased from the near two-year high of 44% seen last summer.