Analysis
May 14, 2026
Final Thoughts: As goes oil, so goes coil?
Written by Michael Cowden
In my past few columns, I’ve mentioned how the current upcycle reminds me in some respects of 2021. Inventories are getting dangerously low. (Sheet stocks are at their lowest point since May 2021!) Lead times remain extended. And mills have few spot tons available. (The ‘a’ word – “allocation” – is being kicked around.)
It doesn’t help that one important EAF mill in the North has a planned maintenance outage coming up or that another in the South is in the midst of an unplanned one.
But there are limits to the 2021 comparison. While some of you tell me that demand is good, others say it’s OK but nothing like what you saw following the pandemic. It reminds me in some respects of 2014. More on that in a moment.
A K-shaped steel market?
Talk of a K-shaped economy has become commonplace in the mainstream business press. You know the story: Wealthy people are doing very well. And everyone else (arguably anyone working for a paycheck) is struggling as the cost of just about everything goes up. (Gas prices are just the most visible symptom.)
It sometimes seems we’ve got our own version of a K-shaped economy in steel. But instead of haves and have nots, it’s highly dependent on the markets you serve. If you’re plugged into work-related data centers, life is pretty good. Same if you’re working on energy transmission work, which is being driven largely by demand from data centers. And things are also good in niche markets like the border wall.
However, if you’re in some more traditional markets, you might not be feeling the same. Ag is being hit by a loss of key export markets stemming from long-simmering trade tensions between the US and China. Meanwhile, as Mercury Resources CEO Anton Posner noted in a good Community Chat today, fertilizer prices are spiking (along with oil and aluminum prices) because of the Iran war. And construction outside of data centers isn’t exactly great, as AGC Chief Economist Ken Simonson pointed out in a Community Chat last month. Automotive sales, meanwhile, fell for the third straight month, according to Cox Automotive.
Side note: Who can afford a new car?
Commerce Secretary Howard Lutnick said during a fireside chat at the American Iron and Steel Institute (AISI) Annual General meeting earlier this week in Washington, D.C., that tariffs weren’t driving inflation in prices for cars, trucks, and SUVs. Let’s say the average vehicle costs about $50,000, Lutnick said. And let’s say the average vehicle contains about one ton of steel. Finally, let’s say the cost of steel is about $1,000 per ton on average. What’s a few hundred dollars matter when the total cost is $50k?
Valid point. We’re paying a lot more for technology in new cars than for steel. But the average annual wage in the US is approximately $70,000, according to the Social Security Administration. Who can afford a vehicle that costs roughly 70% of that?
Shades of 2014
Anyway, I digress. I know there are some people making comparisons to 2008. Maybe that’s inevitable. The financial crisis left deep scars on steel – and just about everyone who lived through it. And so, it seems, there is always someone whose 2008-PTSD has been triggered. (I get it. My grandparents were always worried about a repeat of 1929.)
But the 2008-09 crash was fundamentally driven by something else entirely – the housing crisis. And what we have with the Iran war is an energy crisis. In that respect, this cycle reminds me a little bit of 1H 2014. That also happens to be another time when you could make the case that energy, a new-ish market, and limited capacity caused a price spike.
Back then, the shale boom was still in full effect. And demand for oil country tubular goods (OCTG), line pipe, and anything related to the oil patch was strong. Welded energy tubulars are a significant market for HR. And so oil and coil rose together. And anyone serving energy, or adjacent markets, was doing well.
SMU’s service center inventory data doesn’t go back that far. But our news and pricing archives do. And if you go back, you’ll see it was another time when mills were grappling with a raft of outages, both planned and otherwise. The biggest issue at the time: the winter of 2013-14 brought a historic polar vortex along the Great Lakes, where ice became thick enough to pierce ships. And the Lakes stayed frozen, especially Lake Superior and the Soo Locks, well into the spring.
The result? Mills along the southern Great Lakes couldn’t get ore from the Iron Range. And some had to idle as a result. Meanwhile, U.S. Steel had some serious incidents that further curtailed production. Ditto the former AK Steel, which had a breakout at its (since demolished) Ashland Works in Kentucky. SMU founder John Packard wrote a great synopsis of where things stood in spring 2014.
Oil and coil
What happened with steel prices? We saw hot-rolled (HR) coil tags go from $620 per short ton (st) in March 2014 to $685/st by May, according to SMU’s pricing archives. (Adjusted for inflation, that’s $874/st to $959/st.) That kind of gain was a big deal in the days of mini-cycles.
What caused what was otherwise a strong 2014 market to turn lower toward the end of the year? Russia and OPEC decided to crank up production to stick it to US shale producers. Oil prices went from $98.68 per barrel (bbl) in July 2014 ($137.93 in April 2026 dollars) to $54.86/bbl by the end of the year. And they didn’t bottom out until $25.52/bbl in February 2016, per figures from the US Energy Information Administration.
As oil prices dropped, so did coil prices. SMU’s HR price closed out 2014 at $600/st on average. By December 2015, HR had fallen as low as $370/st ($520 adjusted for inflation) – a number where even modern EAFs struggled to make money.
No one I know is predicting anything like that now. And why should they? For starters, tariffs and trade cases mean there is nowhere near as much import competition as there was back then. Besides, you could make a good case that caution related to past price crashes isn’t serving anyone well now. People being too cautious is arguably having the ironic effect of extending the current pricing upcycle – and the risk of steel shortages.
Also, if we’re going to link this back to AI, I don’t know that there is any equivalent in that space to Russia and OPEC flooding the market. Who could flood the world with data and cheap electricity? In addition, if we were to compare the AI boom to the shale boom, we’re in maybe 2006 – when it was all still new. We’re probably nowhere near 2014, when shale was no longer a revolution but an established industry.
Still, it’s worth keeping a close eye on the market these days – whether SMU news and data, CRU research and analysis, or the mainstream business press. Because I can’t recall a time when both the stock market and the physical steel market were so heavily reliant on growth from just a few sectors.
100 days to go until SMU Steel Summit 2026
We’re officially 100 days away from SMU Steel Summit 2026, which gets underway on Aug. 24 at the Georgia International Convention Center in Atlanta. We’ll be talking steel, AI, and a whole lot more.
I don’t need to tell you that rooms tend to go fast. Or that airline prices are probably only going to go up from here. So get register now and reserve your spot among 1,500 or so of your best friends in steel!
