Analysis
August 21, 2026
SMU Steel Demand Index pace of growth slows
Written by David Schollaert
SMU’s Steel Demand Index saw a negligible decline in growth, slightly behind early August but still in elevated territory, according to mid- to late-August indicators.
The Steel Demand Index, compiled from our survey data, now stands at 65.0, down from a reading of 65.5 in early August and down from a recent high of 69.5 in mid-May.
The index has been in expansion and gaining momentum since late November. The trend continues to underscore steady-to-rising demand as supply remains tight.
The positive movement began to take shape with an early buying frenzy ignited by the onset of undiluted Section 232 steel tariffs last March. And after a slight decline post-rush, the erosion of imports resulted in steady, widespread positive momentum in demand.
But slightly lower readings are likely due to the traditional summer doldrums rather than a larger indication of easing demand.
Methodology
Derived from the market surveys SMU conducts every other week, the Steel Demand Index is a diffusion index and a statistical tool to measure the breadth of change across our overall demand data series. It effectively helps identify widespread demand trends or turning points.
This index has historically preceded movements in lead times. This is notable given that lead times are often seen as a leading indicator of steel price moves. An index score above 50 indicates rising demand, and a score below 50 suggests declining demand.
Figure 1 shows the nearly 13-year history of the index on the left and provides a closer look at the Steel Demand Index readings of the past two years on the right.
What got us here
Last year, demand was uneven but stronger than in 2024, while tariff changes established a higher price floor.
Since then, sentiment, demand and prices have improved. The sheet price rally has lasted more than 10 months—the longest since the post-pandemic rebound in 2020-21—supported by mill discipline and import barriers.
Prices may continue to rise as outages and tight supply offset expectations of seasonal weakness. Hot-rolled coil lead times remain well above seven weeks on average, extending well into October and even into November at some mills.
What’s currently in play
HR coil prices have followed a similar trend, reaching an average of $1,195 per short ton (st) this week. They are up and pointing higher. According to SMU’s latest market check on Tuesday, Aug. 18, domestic hot band ranged from $1,170/st to $1,220/st.
Meanwhile, the average lead time for HR coil is 7.6 weeks, down just marginally from 7.7 weeks in early August. Lead times are nearly double those seen last summer. And they remain at some of the longest levels recorded since the fall of 2021.
Some mills are beginning to catch up on orders following their spring outages. But others are reportedly still struggling to keep up with demand and are quoting significantly longer production times. Meanwhile, fall outages are likely to impact availability once again.
Why our demand index matters
For nearly a decade, SMU’s steel demand diffusion index has preceded moves in mill lead times (Figure 2, left side), and SMU’s lead times have also been a leading indicator of flat-rolled steel prices, particularly for HRC (Figure 2, right side).
In their own words
Here are just a few quotes from our latest survey about how flat-rolled steel buyers see demand, and what might be triggering their perspective:
“Business conditions are very strong.”
“Metal building seems to be on the rise.”
“We have a strong backlog. It seems to keep improving.”
“Demand is strong. Customers are looking at 2027.”
“It feels good to say, but overall demand for us continues to improve.”
“Demand is mixed. Long products remain somewhat soft but are showing signs of recovery, while demand for flat products remains strong.”
“Our demand is stable vs. previous months, but strong vs. previous years’ demand.”
“Fourth quarter stable – declining for 2027.”
“Demand is very strong, just not enough steel to keep up.”
“I believe the ‘how in the heck is the economy still doing this well in the face of everything?’ is starting to overtake us.”
“Plate market is on fire.”
“Stable at a high level.”
Signals ahead
Demand is steady or improving. But spot tons are scarce. Much buying activity remains tied to min-max contracts. In many cases, however, steel buyers are being held to minimum volumes or have been effectively placed on allocation.
Buyers are actively looking at imports in the face of a domestic supply squeeze. Imports remain historically low because of a more aggressive US tariff regime. But there is debate about whether US prices have risen so high that it could result in more import competition in Q4 and into early 2027.
Another wildcard, at time this article was published, was whether the US and Canada would reach a trade agreement that might result in lower Section 232 tariffs on Canadian steel. It’s been reported that the the deal might also include import quotas on Canadian material.
Editor’s note
Demand, lead times, and prices are based on the average data from manufacturers and steel service centers participating in SMU’s market trends analysis surveys. Our demand and lead times do not predict prices but are leading indicators of overall market dynamics and potential pricing dynamics. Look to your mill rep for actual lead times and prices.
