SMU Community Chat: Tanners explores if US steel industry still needs imports

Speaking on an SMU Community Chat Wednesday morning, Tanners laid out a case for why the US might soon no longer need imported flat-rolled steel, thanks to a wave of domestic capacity additions over the last few years.

“Imports are so much less relevant to the US market than they used to be because there’s so much more steel output domestically,” she said on the chat.

She pointed to data showing that hot-rolled coil imports have hovered around 1 million short tons (st) annually, with cold-rolled imports even lower. Galvanized imports have fluctuated, but the total combined volume for the three products is roughly 3 million st a year.

New plants being built or ramping up can easily match that, she noted.

“Conceptually, we’re one new mill away from being self-sufficient,” she stated.

Capacity expansions in motion

And that new capacity is already arriving (check out SMU’s New Steel Mill Capacity Table). Tanners cited major projects like Big River 2, Nucor Gallatin, and AM/NS Calvert, as well as SDI’s Sinton mill and Nucor’s upcoming West Virginia facility. These alone could add over 6 million st to domestic flat-rolled capacity. And then there’s potentially Hyundai and Posco coming as well, and a possible restart of U.S. Steel’s Granite City ops in the future.

On rebar, she noted that additions this year total around 1.5 million st – nearly identical to net rebar imports – suggesting another area where the US could soon meet its own needs. She believes Hybar’s ramp-up this year won’t necessarily be disruptive to the market, but it can displace imports.

Tanners also addressed the galvanized segment, where spreads have started to narrow even before all the new capacity has hit the market (SMU’s New Galvanizing Capacity Table is a great reference). She said premium levels enjoyed during the Covid-era have been declining. And with another 4.5 million st of galv capacity coming online in a 19-million-st market, pricing pressure could intensify.

Who will set the market price?

Underlying her analysis was a key question: If the US no longer needs imports, should imports still be setting the market price?

She argued that in a world where tariffs reduce the relevance of foreign supply, the price should instead be determined by the lowest-cost domestic mill still willing to produce. While she didn’t provide exact figures, Tanners estimated that floor pricing could be around $600/st when using a cost-plus-shred model.

So long as the US doesn’t need imports, that marginal domestic price should become the new floor, she suggested.

Tariffs and trade uncertainty and impacts on demand and trade flows

Tanners also weighed in on the latest trade developments. The Trump administration’s 50% steel tariff caused a stir in futures and equities markets. However, a potential carve-out for Mexico could signal that Section 232 tariffs are negotiable, she said, noting that at least one steel CEO had hinted that the new tariffs might not last through the end of the year.

“It’s better than what we had before Trump was in office,” she commented. “It’s a net win. But it is not as good as the market hoped 10 days ago, before the famous Trump Pittsburgh rally.”

If the US-Mexico trade situation stabilizes, one CEO Tanners spoke to recently anticipates a 5-10% jump in demand for building materials.

“That’s a big move in construction demand,” which is the biggest end market for steel, she pointed out. “Even if it means less restriction on imports.”

She also said a carve-out for Canada would be even more significant, given that our northern neighbor exports about 2.5 million st of steel to the US each year. However, the bigger issue is regulatory clarity. Cross-border steel trade, especially with Mexico and Canada, has been disrupted by unclear rules, leading to what Tanners described as a “paralyzed” demand environment.

She didn’t sugarcoat the uncertainty in the market: “People are sort of paralyzed, kind of waiting for more clarity on what the trade war means.”

Reshoring and looking for clarity

She was also skeptical of some reshoring narratives. In her view, new capacity only matters if it’s tied to downstream manufacturing – things like appliances or autos that lock in steel demand. If the country is just producing steel but not making anything with it, that’s not sustainable, she noted.

Looking ahead, she said the market’s next moves depend heavily on clarity around trade policy and tariffs. Prices may soften if more Section 232 exemptions are granted or if demand remains sluggish. But if imports slow and downstream buyers regain confidence, prices could stabilize or rise.

Clarity is key, Tanners said. Without knowing the rules of the game, you can’t play – or win.

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Thank you to Timna and the SMU community for joining us for this week’s chat!

If you missed the conversation and you’re an SMU subscriber, you can watch a replay of the full conversation here.

Also, mark your calendar for Wednesday, June 25, at 11 a.m. ET when Ken Simonson, chief economist at the Associated General Contractors of America, joins us for a dive into the latest on the construction market. You can register here.