Final Thoughts

Upstream, we don’t yet know exactly where the December scrap market will settle. But few expect it to settle lower. Downstream, service centers are increasing prices along with mills. Case in point: Majestic Steel USA said it would increase prices by 5% effective Thursday on the heels of rising costs, longer lead times, and mill price hikes.

In Canada, meanwhile, ArcelorMittal Dofasco on Monday announced another increase of $100 per short ton (st) CAD. That means the Canadian flat-rolled steelmaker has, over the last month, announced three price hikes totaling CA$300/st – or roughly US$215/st. (You can follow that and other price hikes with SMU’s mill price announcement calendar.)

The wave of price hikes in Canada comes as Ottawa has rolled out stricter measures to stem steel imports. It’s something both Washington, D.C., and Canadian mills have been pushing for.

Put all that together, and it’s probably no surprise that SMU’s price assessments for HR, cold-rolled (CR) coil, and coated products all increased again this week. Our HR price now stands at $895/st on average. That’s up $25/st from last week and up $110/st from a recent low of $785/st in late September, according to SMU’s interactive pricing tool.

And the factors that have driven the rally are all still in play. Chief among them are low imports, lower inventories, longer lead times (now into 2026 at most producers), and more disciplined mills.

But it’s not all good news. Sure, prices are up. However, the spread between HR prices and galvanized base prices remains narrow. It’s $135/st by SMU’s calculations, lower by others, and a far cry from the $200+/st spreads that had characterized much of the post-pandemic market. That’s no fun for converters.

And there remains a consensus that this rally is largely supply-driven. Are there pockets of stronger demand? For sure. We’ve heard repeatedly from mills and some of their customers that data centers and the border fence are soaking up tons. But at this point, we’re not sure how to quantify that. And it’s not clear whether it’s enough to offset the somewhat gloomy macroeconomic data we continue to see.

If you take a look at the Federal Reserve’s Beige Book, you might find it hard to square commentary there with the bullishness in steel. Ditto when it comes to ISM and the Chicago Business Barometer. (Editor’s note: If you want a complete review of the latest economic data, I highly recommend Edward Meir’s weekly columns for Aluminum Market Update.)

So, looking beyond current lead times, what’s the next event that might drive prices higher or at least support them at elevated levels compared to past cycles? An obvious one is spring maintenance outages. But is there enough gas in the tank to keep prices high until then? I’m not sure. Unless demand surprises to the upside.

Then there remains the risk of tariffs being scaled back should the US negotiate trade deals with its allies. US Commerce Secretary Howard Lutnick has said the US could lower steel and aluminum tariffs on the European Union. But only if the EU eases digital regulations the US feels target its technology firms.

I don’t know whether that will happen. Besides, the sources I’ve spoken with don’t seem overly worried about imports from the EU. The concern is more that any deal with the EU could set a precedent for other nations or trading blocs.

Again, we’ll see. Tariff policy is tough to predict when something as (relatively) trivial as a TV ad can trigger an international incident. And I’ve been hearing rumors of lower steel tariffs for more than six months now. So far, though, no steel TACO. And, so, the rally continues.