HDG Prices Decline as German Manufacturing Faces Prolonged Economic Challenges

The Hot Dip Galvanized (HDG) market in Germany is experiencing significant challenges, reflecting broader manufacturing and construction sector headwinds. The HDG market continues to navigate through complex economic conditions, with demand remaining subdued and pricing dynamics under constant pressure.

For the week ending November 8th, HDG prices remained stable, but by November 15th, the German spot market saw a 1% decline in prices. This downward trend is primarily attributed to weak demand in the construction sector and limited industrial activity. The market is particularly sensitive to changes in Hot Rolled Coil (HRC) pricing, as HRC serves as the primary feedstock for HDG production.

Germany's construction sector has been experiencing a prolonged downturn, with the Construction Index showing a significant decline in October compared to September. This weakness directly impacts HDG demand. The sector witnessed quicker decreases in activity levels and new orders, accompanied by substantial staff layoffs, further dampening the HDG market outlook.

The HDG market is facing multiple challenges, including reduced demand from construction firms across the eurozone. While some improvement in mill order books has been observed, the overall market remains subdued. Steel service centres have reported dramatically reduced shipments to end-users compared to the previous year, creating additional pressure on HDG pricing and availability.

Thyssenkrupp Steel Europe's recent announcement of modernizing its Duisburg facility, including the replacement of a 25-year-old casting and rolling line, represents a strategic response to market challenges. The planned ramp-up of a new continuous casting line and hot strip mill in May 2025 could potentially impact HDG production capabilities and market dynamics in the coming months.

Regional challenges are further compounded by broader market conditions. Scrap prices in Germany have declined due to low domestic demand and limited exports, with Turkish steel mills opting for cheaper imports from China. The German steel recyclers federation has expressed concerns about future demand, highlighting the complex ecosystem affecting HDG production and pricing.

As per ChemAnalyst, the HDG market in Germany is expected to face continued challenges through early 2025. The forecast suggests potential price stabilization in the latter half of 2025, contingent upon several factors including recovery in the construction sector, improvements in industrial demand, and the impact of ongoing facility modernization efforts. Analysts predict a potential price fluctuation, with cautious optimism tempered by persistent market uncertainties. The HDG market will likely remain sensitive to changes in HRC pricing, global trade dynamics, and the broader manufacturing landscape