Final Thoughts: The search for steel

In short, finding this elusive thing called a spot ton is hard. As if that weren’t enough, contract tons are getting a little hard to come by as well. Several market participants have told us that certain mills not only have no spot tons of hot-rolled (HR) coil available but are also holding buyers to their contract minimums. And we’re told some plan to do so for the balance of the year.

Imports garner more interest

Maybe it’s no surprise, then, that we’re seeing growing interest in imports—even among buyers in the Midwest who don’t typically buy foreign material. We’ve very much heard of competitive HR offers from a United Nations of countries. Brazilian HR for September ship/October arrival to the Gulf Coast at $1,020-1,040 per short ton (st). Algerian material for September ship/October arrival at $980-1,020/st. And Vietnamese material in the mid-$900s for November ship/December arrival. (The lower price out of Vietnam is probably to account for the longer lead time and the increased risk of prices inflecting lower toward the end of the year.)

SMU’s HR price stands at $1,180/st on average at the moment. And some mills aren’t being shy in their efforts to push it to $1,200/st or higher. So, depending on the country of origin, we’re near or even above the point where there is a $200/st gap between domestic prices and import prices. That’s a level that in the past has been considered sort of a greenlight to buy imports.

It’s a little mind-boggling that imports are competitive even with a 50% Section 232 tariff in place. How is that possible? Let’s take some round numbers here. Let’s say US HR prices were about $800/st a year ago, not long after the 50% tariff went into place in June. Where are we a year later? At about $1,200/st—or 50% higher. In other words, domestic prices have risen to such a point that even a 50% tariff wall isn’t necessarily much of a barrier.

The market remains bullish

There have been assumptions in some corners of the market that import volumes might plateau. Why? Because buyers are concerned about pricing inflecting lower in Q4—or around when current import offers would be arriving. And if you think the market is going to slip, you’re less likely to go long on foreign material.

Sure, a lot of people think the market will inflect lower in the fall. But that is no longer the majority view.

SMU hadn’t released final results of our latest steel-market survey when I wrote this article. (The results will go out to premium subscribers on Friday.) That said, I took an early peek at the data. A solid minority of survey respondents think prices have peaked or will later this month (~19%). About 28% think prices will peak in September. But just over half of survey respondents now think sheet prices won’t peak until October, November, or later.

Meanwhile, most think prices will continue to tick higher. Namely, 61% think prices will be above $1,200/st two months from now. And while spot tons might be scarce, business is good. Most companies tell us they met (50%) or exceeded (34%) forecast last month. Only 16% said they missed forecast.

So what do you do if demand is good, inventories are low, and domestic supplies are limited? Let’s face it. No one wants to say the word “allocation”. But that’s what many people are effectively on, even if no one wants to say the “a” word. Again, seems like imports are the obvious place to turn.

July license data

We see continued evidence of increased import volumes in government figures. The US is slated to import approximately 2.08 million metric tons (2.29 million short tons) of steel in July, according to Commerce Department figures. If that figure holds, it would represent the highest level for imports since May 2025 – when Section 232 tariffs were still at 25%.

That said, the picture is a little more complicated when you look at it by product. Imports of flat-rolled steel actually dropped in July (452,523 mt) compared to June (525,116 mt). The big gains were in semis (630,170 mt in July vs 559,708 mt in June), longs (463,415 mt in July vs 370,428 mt in June), and pipe and tube (465,417 mt in July vs 375,428 mt in June).

Certain countries, notably South Korea (466,247 mt in July vs 382,499 mt in June), accounted for much of the gain. South Korea saw increased volumes across all major product categories and especially in flat products (157,235 mt in July vs 97,176 mt in June).

More trade action on the way?

You can see why, whether you agree or not, Zekelman Industries Chairman and CEO Barry Zekelman lit into imports from South Korea in his Community Chat last month. He also predicted trade action. (“You’re going to see them get smacked.”)

Zekelman’s words turned out to be a prelude of what was to come from executives at leading publicly traded mills when they released earnings. Case in point: Another Barry, Steel Dynamics Inc.‘s Barry Schneider, sounded a similar note. “We are seeing certain countries shipping through the 232s. The offset pricing in the Asian markets has a lot to do with that,” Schneider said. “So the administration is looking closely at what these rates are.”

So maybe any dip in flat-rolled imports reflects not only concerns about a September/October inflection but also worries that there could be some twists and turns on the trade front before material ordered now arrives.

What do you think? Will we be talking about new tariff rates or AD/CVD cases at Steel Summit? Or is the talk of trade action designed to stymie imports so that mills don’t have to go to the more costly task of actually taking action? And what’s a buyer to do when demand is good but there is precious little still to be had?

I think this much is certain. We’ll have no shortage of things to talk about on Aug. 24-26 in Atlanta. And if you haven’t made travel plans yet, it’s not too late to secure your place among more than a thousand of your best friends in steel. You can register here.