Final Thoughts

Cleveland-Cliffs, meanwhile, is seeking $950/st with the opening of its July spot order book for HR. That’s up $40/st from its June spot price but $25/st lower than its May price.

A few questions come to mind: First, the basics, will Cliffs be able to compete $50/st above Nucor? Or will Nucor stairstep its price higher to match Cliffs? (Keep in mind that Nucor updates its list price for HR every week. Cliffs typically does so monthly.)

Meanwhile, we’re still seeing transactions in the low/mid-$800s. So will Nucor and Cliffs be able to enforce their increases, and will other mills follow them? It’s not clear yet.

That we’re seeing mills attempt to push through higher prices is not a surprise. Trump’s doubling of S232 tariffs to 50% raised prices for imports. And imports typically provide the floor for domestic prices. Meanwhile, sentiment has brightened in the scrap market that July could settle “strong sideways” – which should help mills at least hold the line on prices.

But the pace of sheet price gains isn’t as rapid as some had speculated just two weeks ago. Remember in early June when there was talk of $100/st price hikes and HR hitting $1000/st? What happened?

Recall that when the 50% officially went into effect on June 4, there was an exception only for the UK – which is not a major steel supplier to the US. Shortly thereafter, news broke that the US and Mexico, which is an important supplier to the US, were in talks to lower the tariff. And that raised questions about potential exemptions for other major US trading partners – such as Canada and Brazil. (Speaking of Brazil, even with the 50% tariff, I thought we’d see producers that rely heavily on imported slab raising prices more significantly than they have to date. But I digress.)

We haven’t seen a deal with Mexico yet. But Mexico is taking the kind of steps that the US wants to better control imports. So while we don’t know when a deal will happen, we do know that Mexico is putting in the groundwork for one.

Canada is the biggest foreign steel supplier to the US. And Canadian Prime Minister Mark Carney says there could be a deal with the US within the next month. In Canada, too, there are concerns about imports that have been raised not only by the White House but also by Canadian steel companies. (Zekelman Industries, which is based in Chicago and which has significant operations in Canada, has raised similar concerns.)

We also learned more details of the trade deal with the UK this week. The UK’s Section 232 tariff remains at 25%, which is not much of a concession on the part of the US. But the deal also raises the prospect of a tariff-rate quota (TRQ), or soft quota, which is what the country was subject to before Trump revamped Section 232 in March. (The bigger concession might be when it comes to automobiles.)

In any case, if the UK is the template for deals with other countries, you can see why talk of hot band at a grand is mostly out of the market. Because 25% turned out not to be a major impediment to imports earlier this year.

In short, I can see why the pricing momentum that had built up in late May/early June has slowed. But I also see why we’ve nonetheless seen some uplift in tags.

Getting back to the price increases I mentioned at the top of this article, to what extent are they aimed at raising prices and to what extent are they aimed at stopping the bleeding that was happening in the second half of May, before President Trump announced the 50% tariff?

To be clear, it’s not unprecedented to see summer price increases. We saw prices increase in late July of last year. And we saw them rise in mid/late June 2023. (You can keep track with SMU’s mill price announcement calendar.)

Last summer, we saw prices bottom out at $640/st in late July, according to SMU’s pricing archives. They never got to the $750/st that mills were seeking. As we all know, they bumped along at $700/st or just a little below that for the balance of the year. But at least they didn’t slip below $600/st, as had been the fear in July.

In other words, it wouldn’t be fair to say that summer price bumps are destined to fail. But they have a better track record at stabilizing prices rather than increasing them.

Meanwhile, steel production remains near three-year highs. I think it’s safe to say that’s not the case with demand. And, yes, there are fewer imports. But there is also more domestic capacity. As that new capacity ramps up, including on the coated side, the lack of imports isn’t having the impact it would have had before all those new tons (and coating lines) came online.

What comes next? I wouldn’t be surprised if prices continued to move up gradually. I also wouldn’t be surprised if they bumped along roughly where they are now. Hot band at a grand? I wouldn’t say it’s impossible. But I wouldn’t put money on it, either.

SMU Steel Summit

More than 800 people have already registered for SMU Steel Summit, and I’m really looking forward to seeing you and to the lively discussion I’m sure we’ll have with our incredibly knowledgeable speakers.

If you haven’t signed up yet, what are you waiting for? We’ll hold Summit on Monday-Wednesday, Aug. 25-27, at the Georgia International Convention Center (GICC). It’s attached to Hartsfield-Jackson airport by a free tram – so getting to and from the event couldn’t be easier.

You can find more details about Summit, including the latest agenda here, and you can register here. (And, by the way, we build plenty of time for networking into the agenda too.)