According to Steel Market Update, wholesalers within the galvanized steel industry report that discipline is the key to market stability. Heating, Air-Conditioning, Refrigeration Distributors International (HARDI) conducts a meeting once a month to discuss the galvanized steel industry and provides their interpretations of the overall steel market. During the most recent meeting, industry leaders discussed the business conditions within the industry. They also shared the best ways to stop clients pulling their summer steel inventory early in the year to get ahead of potentially increasing prices.
The discipline that was discussed pertains to steel mills and ensuring that they do not bend or break when it comes to prices, distribution, and working directly with suppliers.
“I would say the mills are being a lot more disciplined than the service centers,” said one industry wholesaler. “Our steel shipments have suffered a little because we have chosen not to sell strictly off of floor costs. I would like to see mills remain disciplined so things stay firm for the next month or so. I never trust the mills and it is unusual for prices to stay steady, certainly to stay steady in the $40 to $42 base range.”
Because of the low prices in April and May, businesses purchased galvanized steel products at an alarming rate to prepare for the summer. With demand going back up in the next few weeks, the industry has to be ready for something like this from happening again.
“Demand will be up again in August and September,” another wholesaler added. “We are not sitting on our hands but demand isn’t as robust as it typically would be if it wasn’t for this price movement.”
The steel industry, although it has its ups and downs, has came a long way over the last few decades. Today, more than 88% of steel is recycled and the amount of energy used to produce one ton of steel takes 34% less than it did in 1972. The Golden Gate Bridge, built in 1933, used 83,000 tons of steel back then. Now, the entire bridge could be constructed using half of that.
Another bright spot from the latest HARDI meeting? According to the group, commercial construction use is doing quite well. Even better, domestic mills are staying competitive with international mills. The overall feeling within the industry is that it’s in good hands. Wholesalers are optimistic the market will remain stable and will even improve over time.
