Nucor Strengthens HDG Price in US While Europe Dip Due to Slow Demand

The Hot Dip Galvanized Steel (HDG) market has been experiencing varied trends across different regions, reflecting the complex interplay of economic factors and industry-specific challenges. In the United States, the HDG sector saw a modest uptick in prices during August, while European markets, particularly in Germany, faced downward pressure on HDG prices.

In the US, HDG prices in the spot market increased by 1% in the third week of August, driven by adjustments in cold-rolled coil (CRC) and hot-rolled coil (HRC) prices, which serve as feedstock materials for HDG production. This increase was further reinforced in the fourth week when Nucor, a major steel producer, raised its consumer spot price (CSP) for hot-rolled coil for the second consecutive week. The price hike affected not only Nucor's main operations but also its California sheet subsidiary, CSI, indicating a widespread trend across different regions.

The American Iron and Steel Institute (AISI) reported that domestic steel mill production, which includes HDG, rose for the second consecutive week to 1,754,000 tons, marking the highest weekly output in the current year. The mill's capacity utilization rate reached 79%, the highest since February 18, 2023, showcasing improved efficiency in steel manufacturing, including HDG production.

However, the HDG market's recovery in the US is occurring against a backdrop of mixed economic signals. The New York Federal Reserve's Empire State Manufacturing Survey indicated that while there was a slight improvement in manufacturing activity in New York state in August, it remained in contraction territory. The General Business Conditions Index saw a small increase to -4.7 points, continuing a negative trend that has lasted for nine months.

In contrast to the US market, the European HDG sector, particularly in Germany, faced challenges. During the third week of August, there was a 1.7% decrease in prices for Hot Dip Galvanized Sheet in the German spot market. The European HDG market is currently grappling with weak demand from key industries such as automotive and construction. Trading activities have been slow, with few firms offers available, and mills are dealing with cases individually.

The fourth week of August saw a further slight decrease in the prices of 1mm Hot Dip Galvanized Sheet in the German spot market due to reduced demand from the construction and automobile industries. Activity in the European steel coil market, including HDG, was limited in both Northern and Southern Europe, with sellers and buyers being less active. Prices remained mostly unchanged, although some lower offers were seen for deliveries in September and October.

As per ChemAnalyst, the outlook for the HDG market remains cautiously optimistic but uncertain. In the US, the narrowing price gap between domestic and imported HDG suggests improving competitiveness of domestic producers, which could support prices in the short term. However, the European HDG market may face continued pressure due to weak demand and excess capacity. The market is expected to gain more clarity once participants return from summer holidays, with potential price hikes being considered by suppliers.