SMU’s Week in Review: June 23-27

Market participants around the US say demand remains subdued, yet steady. Unmoved by 50% tariffs, buyers are resisting panic-driven purchases of hot-rolled coil. Why are they on the sidelines? They cite uncertainty around everything from demand and tariffs to US involvement in another Middle East conflict.  

Negotiations between the US and Mexico on steel imports could be targeting a tariff-rate quota system, according to an article in Bloomberg. The quota system would be based on average steel imports from Mexico during the period 2015-17.

Scrap and pig iron

The resistance Brazilian pig iron sellers had shown to accepting declining prices has proved short-lived, with some large cargos sold to the US with lower price tags. Read more about what some sources in Brazil expect going forward.

The US scrap market has settled into the summer doldrums, along with the domestic steel industry. There are some conflicting opinions on its direction, but most players SMU has contacted can’t find a good reason for the market to rise. Then again, they can’t find a reason for it to fall either. SMU’s Stephen Miller has more here.

Surveys

SMU’s Mill Order Index declined for a third straight month in May, but only slightly. Still, the easing trend continued after repeated gains at the start of the year, according to our latest service center inventories data.

The majority of steel buyers say domestic mills are more willing to negotiate lower prices on sheet and plate products than they were earlier this month. Sheet negotiation rates rebounded across the board compared to early/mid-June, while our plate negotiation rate hit a full 100%.

Lead times eased for all four sheet products tracked by SMU, while plate lead times held steady. Prior to June, sheet production times had shortened from early April through late May, with most products falling to lows not seen in more than two years. Plate times also declined throughout May, hitting a three-month low by month’s end. Production times had extended across the board in early June. Now, however, sheet lead times are near some of the shortest levels recorded since late 2023, SMU’s Brett Linton finds.

The marketplace

Cheap steel produced in the Association of Southeast Asian Nations (ASEAN) and China continues to flood Latin America, threatening its steelmakers, according to a new study warning the region that protective measures are critical to the livelihood of its producers. The report highlights the role that government subsidies play in amping up China and ASEAN steel production – and distorting markets.

Appliance importers now face levies under Section 232. And Whirlpool Corp. told Fox Business it will be a “net winner” in this tariff environment. The appliance giant plans to invest in US-based operations, including a refresh of 30% of its product line. But the company admits that consumers are glum.

ArcelorMittal has wrapped up the commissioning of the electric-arc furnace in Calvert, Ala. But there’s still plenty of work to be done, reports SMU’s Laura Miller. This year, ArcelorMittal plans to spend an additional $90 million in capex related to the Calvert EAF project. It plans to reach the furnace’s full annual run rate of 1.65 million short tons early next year.

During a Community Chat, Ken Simonson, chief economist for The Associated General Contractors of America, outlined the headwinds the construction sector is facing, and it’s not just the cost of materials due to tariffs. Big spenders in the building sector – universities and hospitals – are particularly vulnerable as questions remain over funding prospects. In addition, deportations and immigration restrictions have led to work sites being raided and employees afraid of reporting in. You can read more about what’s going on here.

Coming up, CRU analysts Thais Terzian and Frank Nikolic will be the featured guests on the next SMU Community Chat on Wednesday, July 9, at 11 am ET. A recording will be available to SMU subscribers. You can register here.

Economic highlights

Tuesday, July 1: Construction spending (10 a.m.); Job openings (10 a.m.); ISM manufacturing (10 a.m.); Auto sales (tba)

Wednesday, July 2: ADP employment (8:15 a.m.)

Thursday, July 3: Initial jobless claims (8:30 a.m.); Factory orders (10 a.m.)

Friday, July 4: Markets closed