Hot Dip Galvanized Coil (HDG) Market Stays Stable Despite Mixed Signals in Steel Industry

The Hot Dip Galvanized Coil (HDG) market in the United States has maintained stability, with prices remaining unchanged in the spot market. This steadiness in HDG pricing comes against a backdrop of fluctuating trends in its key raw materials, hot rolled coil (HRC) and cold rolled coil (CRC).

While HDG prices have held firm, the HRC market has shown signs of modest growth. A slight increase in demand for HRC has led to a small uptick in pricing, with mills reporting more receptive market conditions for their price adjustments. Nucor, a major player in the steel industry, recently raised its announced weekly spot price for HRC by $10 per short ton. However, there's scepticism among market participants about whether this new price will be accepted, with a Midwestern distributor noting that customers will only pay if they have no other options.

Conversely, the CRC market, another crucial component in HDG production, has remained steady due to limited market activity. This stability in CRC pricing has likely contributed to the unchanged HDG prices, balancing out the potential upward pressure from the HRC sector.

The American Iron and Steel Institute (AISI) reported that the weekly raw steel production in the U.S. for the week ending September 14 was 1.75 million short tons, with a capacity utilization rate of 78.8%. This represents a slight decrease from the previous week, but a 3.4% increase compared to the same period in 2023. Geographically, the South led production with 747,000 short tons, followed by the Great Lakes region with 597,000 short tons.

In the broader steel industry context, AISI has been actively advocating for the domestic market. The institute has supported the "Levelling the Playing Field Act 2.0," aimed at protecting American workers and industries from unfair trade practices, particularly those employed by Chinese producers. AISI has emphasized the need for updated trade laws to address challenges posed by non-domestic entities circumventing existing regulations.

The HDG market is also closely watching developments in the decarbonization efforts of major steel producers. Cleveland-Cliffs' consideration of options for decarbonization investments at its Middletown Works in Ohio, including the potential replacement of blast furnaces with hydrogen-ready direct reduced iron plants, could have future implications for HDG production processes and costs.

As per ChemAnalyst, the outlook for the HDG market in the USA remains cautiously optimistic. While current prices are stable, potential increases in HRC and CRC costs could exert upward pressure on HDG prices in the coming months. The market will likely be influenced by the success of steel mills in implementing price increases for base products, as well as the outcome of trade policy initiatives. Additionally, the industry's focus on decarbonization and technological advancements may lead to shifts in production costs and methods for HDG. Market participants should closely monitor these factors, as they could significantly impact HDG pricing and availability in the near to medium term.