SMU Week in Review: September 1-5 

Domestically produced hot-rolled coil spot market base prices remain at $805 per short ton (st) this week, unchanged from last week but still down $25/st over the past four weeks. 

Market sources provided many mixed data points this week. Likely, regional influences and seasonal considerations played a role in varying conditions across the abbreviated business week, as the US observed Labor Day on Monday, Sept. 1.  

Prices and lead times for domestic sheet and plate have continued to stay within a few days of multi-year lows for nearly four months. And, SMU finds that certain imported steel products remain competitively priced, even with the application of Section 232 50% tariffs applied. For example, hot rolled coil from some Southeast Asian countries could land to customers at ~$772/st, $33/st cheaper than domestic HR.   

Meanwhile, the price difference between domestic and imported cold-rolled coils has widened. This week, US CR coil prices averaged $980/st, down $15/st from the previous week. And if domestic CR prices are  ~16.2% cheaper than imports on a landed basis, then the gap between domestic and imported CR has increased from a 13.4% gap the week prior. 

Sentiment among market participants showed modest improvement for the domestic market. After dropping to the lowest level since May, just two weeks ago, the Current Buyers’ Sentiment Index in the SMU survey shows a two-point gain this week. Despite future outlooks continuing to hold below the 2024 sentiment levels, this week Future Sentiment picked up one point. 

And of the thousands of survey respondents asked whether mills are willing to negotiate on spot prices, 94% of respondents said mills were willing to talk price to secure an order. 

The American Iron and Steel Institute (AISI) report on domestic steel production stated that in the week ending Aug. 30 domestic mills produced 1,769,000 st. This was off 0.6% from a week earlier, but a 2.5% rise from the 1,726,000 st rate seen the same week last year. 

Trade and Tariffs  

During the US International Trade Commission’s (ITC) five-year ‘sunset’ reviews of duties on HR from China, India, Indonesia, Taiwan, Thailand, and Ukraine, the ITA determined removing trade measures would threaten the domestic steel industry. 

The Commission voted to extend the existing orders for HR from those countries for at least another five years.  

Meanwhile, US steel market barely flinched upon hearing news that a US Federal Circuit Court ruled US President Donald Trump’s use of the International Emergency Economic Powers Act (IEEPA) for “reciprocal” tariffs isn’t legal.  

Most of the market is confident that the carve out for Brazilian raw material imports for steelmaking is all that matters to the domestic steel market. Any “reciprocals” associated with raw materials will cost or save a nominal fee depending on the outcome of the Supreme Court’s decision, as the Trump has requested the justices hear the case.  

Trade between the US and Brazil on pig iron remained quiet this week. Brazilian sources said they’re awaiting discussions with US mills about future shipments. And lower Phos pig iron from Ukraine into the US increased to 150,000 metric tons (mt) in July, according to the Ukrainian State Customs Service.

Meanwhile, sources told SMU that the scrap market is “supply-driven.” They contended that demand is holding steady, but the overall scrap market is “sloppy.”  

Acquisitions 

This week saw acquisition announcements from Friedman Industries, Falcon Point, and Varsteel. 

Friedman Industries, a Longhorn, Texas-based steel manufacturer and processor acquired Century Metals’ owned facilities in Miami. It also included the leased distribution and warehouse facilities in Orlando and Tampa, Fla., in the sale. 

Private-equity firm FalconPoint Partners acquired SMS, an industrial service provider. It committed $500 million to support the platform’s growth with state-of-the-art equipment and grow its market share. It noted the acquisition is a carve-out of various operating segments of Scrap Metal Services LLC, a global metals recycler headquartered in Chicago. 

Varsteel, a Lethbridge, Alberta-based service center acquired two companies based in British Columbia: Reliable Tube, based in Langley, and Spartan Metal Processing, based in Kelowna. Each will operate as an independent subsidiary of Varsteel, the company said in its Sept. 3 LinkedIn update.   

Broader Context 

The US Federal Reserve published its Beige Book, which highlighted regional differences in economic, labor, spending, and investment activities. Fear around market uncertainty still characterizes the US market, the Fed finds.  

The Institute for Supply Management (ISM)’s reports found that the domestic manufacturing sector has contracted now for a sixth straight month.  

And the US Census Bureau data estimated spending at a seasonally adjusted annual rate of $2,139 billion in July, down 0.1% from June’s revised rate of $2,140 billion. The July figure is 2.8% lower than a year ago .July’s result is the lowest total since December 2023, according to Census data.