Final Thoughts: The Chicago Briefing

It brought together about 80 execs from across the flat-rolled supply chain to discuss the latest developments and dynamics at play in the marketplace.

We were joined by CRU Research Principal Josh Spoores, Flack Global Metals Founder and CEO Jeremy Flack, Brown Gibbons Lang & Co. (BGL) Managing Director Vince Pappalardo, and BMO Managing Director Andrew Pappas.

Below are some snippets and key takeaways of what you missed.

The rally has outlasted expectations

SMU Editor-in-Chief Michael Cowden kicked off the briefing, detailing how the flat-rolled steel market remains tight, with scarce spot tons, low inventories, and lead times still firm across most products.

And the price rally has lasted longer than many expected, supported by spring demand, cautious inventory buying, and ongoing supply constraints. At the same time, flat-rolled imports are recovering only modestly from historic lows, leaving domestic mills with continued pricing power.

The Iran war is also adding cost pressure through freight and logistics, boosting transportation expenses and giving mills some additional domestic price protection, Cowden said.

But ultimately, the market is split, according to Cowden. While some in the market think prices may soon peak, others see more room for upside before economic uncertainty or demand decline finally slows the market.

Geopolitical risk meets firmer demand

Flat-rolled steel markets are entering a period shaped by two opposing forces: a renewed geopolitical shock to energy and logistics, and the first signs of a more durable improvement in manufacturing demand, said Josh Spoores, CRU’s research principal.

CRU sees the Strait of Hormuz disruption as the most immediate risk, with oil and industrial supply chains still vulnerable even under a fragile ceasefire.

In the base case, traffic through the Strait remains heavily constrained through April and May, keeping Brent elevated before easing later in the year. But the downside for steel is not limited to energy alone. Higher costs could feed through the supply chain and lift mill costs more broadly.

But the market has seen this dynamic before, Spoores said, pointing to the 2008 commodity surge and the post-pandemic rebound. In both cases—especially the Covid-era supply chain dislocation—energy and logistics disruptions quickly turned into steel price spikes.

That pattern could repeat if tighter energy availability or petrochemical shortages affect downstream industries such as automotive and construction products, said Spoores.

At the same time, underlying US steel sheet demand is improving. Seasonal manufacturing output has strengthened, supported by other indicators trending higher. But while construction remains softer, manufacturing appears to be providing a clearer tailwind.

On the supply side, US flat-rolled imports have already fallen sharply under the expanded Section 232 tariff regime, with Q4’25 arrivals down nearly 50% year over year (y/y).

Domestic prices have responded, and new capacity is also beginning to reshape the market.

Spoores expects nearly 8.5 million tons of additional US sheet capacity to come online between 2023 and 2028, further limiting import needs over time but increasing timing risk and volatility.

Metal lending and M&A in the tariff Wild West

BMO’s Andrew Pappas said the metal lending market has regained momentum after a slow start in 2025.

Tariff uncertainty, high interest rates, and softer demand weighed on activity early in 2025, but deal flow improved in the second half of last year and has carried into 2026.

He said lenders are now largely treating tariffs as “priced in,” while improved cash flow and stronger M&A discussions have supported financing demand.

The standout story is asset-based lending (ABL). Pappas said 2025 ABL volume rose about 40% y/y to $147 billion, with 257 deals, the third-highest annual total on record.

Brown Gibbons Lang & Co.’s Vince Pappalardo agreed with that view, adding that metals M&A remains active in 2026, even if it has cooled from the record pace of 2021–22.

Mills, scrap processors, and service centers are still pursuing strategic deals, but for different reasons, he said.

Mills are buying scrap recyclers to secure input supply as EAF capacity grows, while service centers are targeting fabrication assets and regional peers to expand margins and market share. Scrap processors continue to consolidate for density and geographic reach.

Recent transactions underscore the trend. Ryerson and Olympic closed their merger in February 2026, creating the second-largest North American metals service center and targeting about $120 million in annual synergies.

Worthington Steel’s January 2026 deal for Kloeckner & Co. could triple scale to roughly $9.5 billion in combined revenue, with around $150 million in annual synergies expected by fiscal 2028, said Pappalardo.

Still, while geopolitics and tariffs create uncertainty, structural demand from reshoring, data centers, and aerospace should keep metals M&A strategically important.

Flack sharpens focus on service centers and AI

We closed out the gathering with a wide-ranging fireside chat with Flack Global Metals (FGM) founder and CEO Jeremy Flack.

From why the market still feels tight, hedging, capacity, price risk, and the case for friction reduction, to a bull market built on demand, not hope. It was an entertaining and compelling interview.

Ultimately, Flack offered a candid look at how his company has evolved—and where he believes the industry is headed next.

His path into steel was unconventional. Starting in finance, he first studied mini-mills from a lender’s perspective, then moved into futures and derivatives, where he was surprised by how little interest the steel industry showed in price risk tools.

That gap, he said, helped drive the company’s expansion into the physical market, where it could better align risk management with ownership of inventory and assets.

What made the discussion especially memorable were the moments when Flack pushed back on the usual framing of the market.

He declined to talk in detail about managing a slow upward grind in prices, and when asked about the futures curve, he bristled at the idea that it predicts the future. Instead, he framed it as a pricing signal—one that helps manage risk, not forecast direction.

Still, the biggest strategic takeaway was that FGM has now narrowed its focus to the service center business. Flack said the firm has sold Fabral, its metal roofing business, and Windsor America, which produces garage and overhead doors.

In a bit of a breaking-news moment, Flack said Pacesetter is being folded into FGM as part of the group’s formal transition.

And a surprise to many in the room, Flack revealed that the FGM had briefly owned an aluminum extrusion business, a detail that underscored how quickly the portfolio has shifted.

Flack’s comments on AI might have been the most striking. He argued that understanding how to use AI will soon be as fundamental as being able to read and write, warning that those who ignore it risk being left behind.

“I think there’s a lot of really silly talk about AI. And that we’re not, by and large, as a white-collar workforce, taking it seriously, but it’s coming for us.”

But Flack was quick to include himself in that warning, saying the same pressure applies to leadership. If he does not adapt, he too could become obsolete.

How business will evolve under AI, Flack isn’t sure. “Who knows? But this is a dangerous time. It’s an exciting time,” he said.

Up Next

Steel 101 Workshop on May 19-20 in Corpus Christi, Texas, at the Omni Corpus Christi hotel. The workshop includes a guided tour of SDI Sinton and Bull Moose.

You can get more details here. And you can register here.

Space is limited, so don’t delay!

And, as always, from all of us at SMU, we thank you for your continued support.