HARDI: “We Feel the Floor Has Been Hit”

The steel price increases announced by the major mills have not had much effect on the HVAC sector yet, but members of the Heating, Air Conditioning & Refrigeration Distributors International (HARDI) are hopeful the market has bottomed and the value of their inventories has stabilized.

“There hasn’t been much change in behavior on the street level yet,” said one HARDI member during the trade group’s monthly conference call today.

“Our competitors have not done anything yet to indicate they are ready to move prices up,” said another executive. “Demand is still fairly good, but I think it will take a little time to see if this increase is going to stick and turn things around.”

“It will take some people actually transacting at the higher numbers to get it to stick,” added another distributor who also reported strong demand in his region. “But I tend to think we are at a bottom and prices will go up from here.”

John Packard, president and publisher of Steel Market Update, reported that steel prices have seen a small bounce since the $40 increase announced by the mills June 25-26. “Virtually all the mills are beginning to hold firm on price. Service centers are at the point of capitulation and will support the mill price increases. We should see a change in the tone of negotiations this week,” he said.

Steel Market Update predicts the price increases will stick, at least partially over the short term, and more price hike announcements can be expected to follow. (Indeed, Nucor announced a second $40 increase shortly after the HARDI call today.) Ferrous scrap prices, which have slid by $90 per ton in the last four months, are at or near the bottom and are forecast to move up soon, supporting higher finished steel prices. Mills in Mexico and Canada are slowly building their order books, but low domestic prices are likely to keep imports at bay until at least the fourth quarter, Packard said.

An informal poll of the HARDI members on the call indicated that eight out of 10 predict galvanized steel prices will stay level or increase by perhaps $20 per ton ($1/cwt) in the next 30 days. Said the call’s moderator: “Clearly, as a group, we feel the floor has been hit.”

Steel Market Update participates in a monthly steel conference call hosted by HARDI. The call is dedicated to a better understanding of the galvanized steel market. The participants are HARDI member companies who are wholesalers, service centers and manufacturing companies that either buy or sell galvanized sheet products used in the HVAC industry.