Steel Summit: Analysts say demand likely to struggle until 2027

“So far this year, your top two sources of sheet steel demand – which combine for over 50% of demand – is construction and lightweighting automotive production; we’ve seen spending fall. It’s negative,” he said.

CRU economists expect North America to lose just under 1 million units of lightweight vehicle production this year. At one ton of steel per unit, that’s about 1 million tons lost in North America, he said. Automotive is expected to pick up in 2026, but the uptick likely won’t replace what is lost this year.

Industrial production is strong, with a 0.7% increase expected this year and a 0.8% increase next year. Meanwhile, imports are still coming in, but are declining.

“Over the coming years, we see that as demand slowly increases, production continues to rise at a faster rate, and the amount of material that we bring in for imports continues to dwindle and fall,” Spoores said.

“And this is where some things will get interesting, is at some point, maybe it’s right now, maybe there’s at some point later, a couple months, and maybe in the quarter, we see that imports come in and we just don’t need them. They were ordered. There’s a lag to when they arrived versus ordered,” he commented.

“Going forward, what we can see is your marginal source of supply moves away from imports, and it moves back into the domestic market. That’s going to coincide with some increased price volatility as that comes about,” he continued.

This is partly due to new capacity coming online – about 2.4 million metric tons this year, followed by about 1 million mt next year. And additional supply agreements beyond that.

“The question is, will we have demand to support that, outside of what happens with imports?” Spoors commented.

John Anton, director at S&P Global Market Intelligence, noted that prices are already high and have little room to go except sideways or down this year.

“If anyone, in anything, says they deserve a price increase because of demand, look them in the eye until they blush in shame,” Anton said. “Because no one deserves a price increase in anything because of demand.”

If a price increase happens, it will come from the supply side – for instance, from tariffs or an unexpected outage. But there is still a lot of spare capacity, “so if one furnace goes down, it won’t be too long before another one comes up,” he said.

“For prices to go big up or big down, it’s going to take a pretty big outside shock,” Anton said.

Timna Tanners, managing director of equity research of Wells Fargo, argued that the Section 232 tariffs, imposing a 50% levy on steel, are functioning as an “umbrella” that will force imports — about 15%–20% of supply — to evaporate over the coming months. That will allow service center inventories to work down. She expects hot-rolled coil prices to hit about $900 per short ton by year’s end.

“These 50% tariffs are a legitimate deterrent, if you will, or an umbrella against the sheet storm for now,” Tanners said.