Steel market shakes tariffs off amid weak demand

The operator of a Midwestern steel service center says that recent tariff announcements have no bearing on prices, as there is simply no demand. 

“There is no demand right now, so what does it matter if the tariff is 50% or 200%? There is plenty of capacity domestically and until the steel economy increases, pricing will continue to fall,” the source said.

“Also, the tariffs change from week to week, so who knows if these will stick at 50% or at all,” the service center source added.

He cited the auto industry as an example. 

“Everyone is saying that the tariffs are going to make car prices go up. So, guess what? Fewer people will buy cars. Less steel needs to be produced.  And the market keeps falling,” the operator said.  

The same service center operator says that a rush of panicked buyers increased their inventories ahead of President Trump’s “Liberation Day” tariff announcement. He believes the confluence of the restocking frenzy and the end market lack of demand is causing the current pricing environment to stand still.  

“When the original announcement was made about tariffs, everyone panicked,” he said. “Then they rushed to buy their steel during the months of March and even into April.” 

The operator noted they wanted to beat price increases. “Customers who buy material each month probably bought three months’ worth and now they are sitting on stock. No need to order in May or June.”

He added: “Now you are in the summer months, which are typically slower than spring and fall.  Demand will be down probably until the end of August when things normally ramp up.”

A Midwestern carbon and steel plate distributor has a similar outlook about the market this week.  

“Business-wise things are currently messy! There’s plenty of supply out there. Service centers are lowering transaction prices and demand is soft,” the Midwestern distributor said.

“Business is not dead, but service centers are feeling it and fighting it out for every order. From where I sit today, it looks like it will be our market for the next couple of months,” the distributor added.  

Commenting on recent tariff actions, he says tariffs are “all over the place.” 

“I can’t see how the latest 50% on Canada will last, President Trump will negotiate something and then lower them.  Too much volatility to try and pin it down, we’ll just have to wait it out,” he said.

“I don’t think much will change in the short term. We need to get through the summer months and business should start to pick up, the distributor continued.

He doesn’t foresee a spike in demand but can see a little pickup month over month as we move through 2025. 

“At least that is my hope, and then a good couple of years after,” the distributor concluded.  

One Texas-based welded steel oil country tubular goods (OCTG) distributor says mill production is currently limited to “PO [purchase order]-in-hand” production.

He says steel mills are not producing any surplus supplies.  

“All this policy back-and-forth has frozen the market. Mills are filling orders, but are only producing to order, not producing for speculation,” he said.

And added: “Everyone who wasn’t before is now in a dead stop awaiting the rules of the game. This will affect markets in six to nine months as supply diminishes.”

Unlike many other steel service center operators and distributors, a midwestern service center sales executive is not feeling the pinches described by other members of the market.  

“Prices are sticking, I have not seen any official increases or decreases. I think any chaos in the markets is just noise,” said the executive.

He attributes fewer hiccups in his business to serving a large swath of small businesses with limited orders.

“Demand on my side is still OK. We sell to many smaller customers and our orders are small. I know that Canada is not driving much business, and I’d guess that anyone who’s been relying on cross-border production will be driving less business too,” he explained.

He said, that from his purview, prices are unchanged because, “Canada is out and foreign imports are out.”

In the equivalent week of 2024 prices of domestically produced hot rolled coils ranged from $680-730/short ton (st) and domestically produced prices of plate ranged $1,140-1,120/st, according to SMU’s interactive price tool.

All prices are ex-works, domestic mill, FOB.