Final Thoughts

I chatted with Josh Spoores, head of Steel Americas Analysis for CRU. He will be hosting an emergency webinar: “What does Trump’s doubling of tariffs mean for aluminum and steel industries?” along with two other CRU colleagues in aluminum.

It’s free for anyone to attend and starts at 10 am ET on Thursday, June 5. You can register here.

The webinar was originally just for clients. But, as you can imagine, this subject has attracted a lot of interest and so was opened up for a wider audience.

Spoores said it will be about “our expectations on where things move from here, what we should be expecting.”

In addition to the analysis, there will also be plenty of time for Q&A, because all our inboxes have been stacked with questions.

What the heck is going on?

Spoores noted that how you view these new tariffs could have to do with where you sit on the value chain.

He said producers are certainly “excited” about them, adding that it will “further support their margins, their profits, and investments.”

On the other hand, Spoores stated that feedback CRU has received from steel buyers shows them more tepid on the new tariffs.

“The US is a net importer of steel, and so imports essentially set our price,” Spoores said. “So if there’s any protective tariffs that are charged to imports, all it simply does is raise the price.”

“They’re not so excited about it, because all it does is raise their costs,” he said.

For OEMs, he pointed out that it all depends on their procurement strategy.

“How are they buying? If they’re buying spot, they’re going to see an increase much faster than someone on a variable contract that takes more time,” Spoores said.

One commonality, no matter the position on the value chain, was that this was unexpected.

“I haven’t run across anyone yet in steel buyers, steel producers, or steel industry associations that knew this was coming, or knew this was even something on the table,” Spoores said. “So it was a surprise to generally everybody.”

A rundown

Spoores said steel prices surged from January to the end of March and people overbought, “rightfully so.”

“Buyers shifted their orders from imports as much as they could to domestic and built up inventories,” he continued. “And those inventories still look high in April.”

“We’re waiting to see what May looks like. But right now, it seems like there’s so much uncertainty in the market,” Spoores said.

(Editor’s note: SMU will release May service center inventory data to our premium subscribers on Monday, June 16. You can find that information here. If you’d like to upgrade for executive to premium, reach out to SMU account executive Luis Corona at luis.corona@crugroup.com.)

“I think it’s smart to think about the risk associated with purchasing steel right now,” he added. “If things were getting towards normal inventory levels, maybe it would make sense to buy a little bit more. But it seems like there’s an overwhelming thought that these may not be sustainable.”

So what could happen now that we have reciprocal tariffs set to land soon as well?

Spoores said there is a possibility that we could have “big trade deals coming here in a couple of weeks, so maybe this (the added tariff) is just an extra lever that the administration can pull to negotiate a better trade deal.”

As in all things since Liberation Day, expect the unexpected, and keep your eye on Truth Social! We know we will be as we keep you updated on all the newest developments.