HARDI: Galv demand improves in October, higher prices expected in new year 

Market Outlook 

During the call, an informal survey of participants found 73% of respondents expect prices to remain flat for the next 30 days. The remaining 26% of survey respondents were evenly split between seeing prices up $2 per hundredweight or down $2/cwt. 

SMU’s galvanized steel spot price assessment on Oct. 21 verified weekly market transactions took place at an average of $925 per short ton (~48/cwt).  

You can use the SMU interactive pricing tool to find pricing data for steel and scrap. 

The same poll found that in six months, 64% of respondents expect prices to be up more than $2/cwt compared to current prices. And nearly a third of respondents (29%) suspect prices will increase by more than $6/cwt. A bullish 7% of respondents anticipate prices will soar more than $10/cwt higher than today’s price.  

Twelve months from now, over half of the respondents (57%) said they think prices will reach the $50-59/cwt range. Twenty-nine percent of respondents expect prices to fall within the $60-69/cwt range. The remaining 14% of respondents are split between the bearish and bullish ends of the price spectrum. Seven percent anticipate transaction prices in the $40-49/cwt range. The remaining 7% have the bullish perspective that prices will increase to $70-79/cwt. 

Monthly Conditions 

Participants found that prices have deteriorated since September. Many thought the bottom of the market had come at the end of the summer.  

However, one HVAC professional said in jest, “The market has not reached the bottom if it continues to drop each month.” 

In September, demand was flat to soft. Most participants said they continue to see steady business, but a couple outliers described experiencing “lumpy” demand. The phenomenon plays out as moments of strong demand become diluted by periods when demand stagnates or slumps. Overall, the month looks flat, but the reality is these heavy swings up and down on a day-to-day basis.  

The spread between base prices of hot and cold rolled products and galvanized products remains narrow compared to years past. Participants confirmed that they’re experiencing firm mill pricing but explained producers will negotiate if buyers have substantial volume for the right products.  

Commentary  

An HVAC steel supplier confirmed his business is experiencing elevated demand aligned to the annual trend he sees each autumn.  

“Seasonally, September and October are decent volume months for us and they’ve continued to be this year. Demand is still decent. We felt last month that prices had bottomed. I’d say now having been in negotiations, that is a factual assessment. We are not able to get any better pricing than we were offered in September,” he said.  

He added, in reference to NLMK’s price increase, “It’s still too early to tell what will happen with mill price increases.”  

One call participant with a Midwest service center business confirmed his conditions have been largely stable since last month’s call. 

“We’re still pretty consistent with a flat market up here in the Midwest. After the uptick earlier in the year it’s been pretty interesting to see our larger mechanical contracts pull materials slower than we would like to see,” he stated.  

One Southeastern call participant saw an uptick month-on-month for business. 

“It’s pretty decent. We’re selling what we expect to sell. Steel is readily available and that is reflected on the street as well,” he noted. 

HARDI’s November conference in Las Vegas will replace the monthly phone conference. Calls are scheduled to resume in December.  

SMU participates in a monthly steel conference call hosted by HARDI and dedicated to better understanding 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 HARDI member companies.