The final week of May revealed a mixed picture for the global markets for Hot Dipped Galvanized Coils (HDG), with European producers holding their ground in the face of growing difficulties while China appeared to be bottoming out.

Key Highlights:

• China's slowdown: HDG prices dropped just 0.2% in the final week, a welcome relief after hammering in the third week of May
• European resilience: Both Germany and Italy kept HDG prices flat, bucking broader market weakness
• Demand reality check: Chinese buyers remained cautious while European markets showed surprising stability
• Stock levels: China saw modest inventory improvements, easing some supply pressures
• Raw material blues: Falling Hot Rolled Coil prices kept eating into HDG margins, especially in China

The market in China is at last catching its breath. In late May, after weeks of consistent drops, HDG prices were able to considerably slow their decline. In contrast to the 0.5% decline saw in the third week, the 0.2% decline was nearly refreshing. While traders appeared less anxious about offloading inventory, steel mills persisted in their maintenance schedules, which helped to tighten supply. It feels like we might be finding a floor, but it's not quite a recovery.

Germany surprised everyone by holding steady. Despite all the doom and gloom surrounding European steel markets, HDG prices didn't budge in the final week of May. The market seems to have found its balance between supply and demand, even as broader economic headwinds persist. Infrastructure spending is keeping some hope alive, though buyers remain cautious about making big commitments.

Italy's HDG market proved its mettle by maintaining stability even as the broader Italian steel scene took a beating. While general steel prices crashed 8% by month-end, HDG held firm thanks to steady demand from packaging and construction sectors. It's a stark reminder that not all steel products are created equal.

Things are getting interesting in Europe's HDG space. French producers are feeling the heat from cheaper Italian and Spanish offers, particularly in southern regions. Meanwhile, German mills like Badische Stahlwerke and Feralpi Riesa are making hay while the sun shines, charging up to €698/ton thanks to Riva Hennigsdorf's production halts.

Trading activity remains sluggish across the board. Most players are taking a wait-and-see approach, watching how mill maintenance schedules play out and whether demand will pick up. The combination of cautious buyers and limited production capacity is creating an odd sort of equilibrium.

According to ChemAnalyst, the June HDG market outlook points to possible short-term price corrections, especially if scrap prices increase. However, growth potential may be constrained by low seasonal demand, a pre-holiday market pause, and a decline in residential construction activity. While the stabilization of China's HDG market and the price resilience of Europe show underlying market strength that could support recovery once demand conditions improve, infrastructure projects continue to be important demand drivers.