Final Thoughts: Contract talks edition

There are (still) no deals to be had

For starters, the negotiation rate—the percentage of steel buyers telling us mills are willing to cut a deal—fell to 9% across all sheet and plate products and to 4% for hot-rolled (HR) coil. In other words, the rate remains at the lowest levels we’ve seen since August/September 2021, when the talk at SMU Steel Summit was whether HR would hit $2,000 per short ton (st). Spoiler alert: It didn’t quite get there. 

And if you drill into those numbers, what’s considered a “deal” might be getting steel at $1,225/st instead of, I don’t know, $1,240-1,250/st—assuming you can find any spot tons at all. We’re also hearing that even more mills are holding customers to their contract minimums. Meanwhile, contract negotiations are heating up in one of the tightest markets since at least 2021.

Thoughts on contract negotiations

I’ve heard discounts will be lower, min-max ranges will be tighter, and there will be less freight equalization and waiving of extras. I’ve also heard there might be take-or-pay agreements for minimum volumes. But sort of like the rumor about contracts at a premium to CRU, I don’t know whether any buyers would actually agree to such terms. 

That said, as best as I can tell, more buyers are looking to place more tons on contract to guarantee supply. That makes sense after a year in which availability has often trumped price. I don’t know, however, whether the precedent of the first eight months of the year is the best way to plan for the following year.  

I know some of you told me around this time last year that you planned to ride the spot market. There didn’t seem to be any urgency to buy when, a year ago, the negotiation rate for HR was hovering between 95-100%. Literally any mill approached had a special deal for you.

A farewell to price spikes

I heard from some folks who had mapped the price spikes since the pandemic. (You can do that with our pricing tool here.) Each spike was a little smaller than the last. The Ukraine war price spike in 2022 was lower than the post-COVID rebound spike in 2021. It was the same story with brief price spikes in late 2023/early 2024 (post-UAW strike rally) and 2025 (re-implementation of undiluted Section 232 tariffs). Each spike was lower than the last. 

I don’t think many people had HR slowly grinding above $1,200/st on their bingo card this time last year.

Imports inflect higher

I’m not saying the market is about to turn. I don’t pretend to be smart enough to spot inflection points. 

But there definitely has been an inflection point in the latest import license data. August steel imports totaled 2.25 million metric tons (mt), according to figures last updated by the Commerce Department on Sept. 1. The figure marks the highest level for steel imports to date this year. You’d have to go back to May 2025, just before Section 232 tariffs went to 50%, to find a higher monthly total. 

Flat-rolled (FR) steel imports are higher too. License data puts them at 609,841 mt in August, up from 448,437 in July. And it marks the highest level for FR imports since 711,501 in July 2025.  

Another tidbit caught my attention: The US imported 636,755 mt of slab in August, up from 581,337 mt in July and marking the highest point for slab arrivals since June 2023—when Joe Biden was still president. Among the drivers are regular (and increasing) volumes from Indonesia (116,549 in August vs 72,815 in July), which hadn’t previously been a player in the US slab market. Canadian slab volumes, meanwhile, have also been ticking higher for much of the year. 

Will tough trade talk limit them?

The question, as I see it, is to what extent import volumes continue to move higher in the fall. Let’s say HR gets as high as $1,240-1,250/st. The case for buying imports would only get stronger—especially with lead times still long and domestic availability limited. 

Then again, there has been more than a little chatter about potential trade action—notably targeting South Korea—on earnings calls, during our Community Chats, and on the stage at Steel Summit. Does that mean there will be enough caution to keep import volumes lower than they otherwise would be in a market like this? 

That’s not necessarily a bad thing. CRU’s Josh Spoores predicted at Steel Summit that US Steel demand would increase by 2.2 million st next year, enough to absorb new domestic capacity but perhaps not enough to absorb imports if they continue to move higher.

Good demand meets “affordability” 

Another thing I’d keep in mind is demand. We put together a word cloud from the questions submitted at Summit. The most common word—wait for it—was “steel”. But for all the talk about tariffs, Section 232, and Canada, the next most-used word in questions was “demand”. 

Executives and attendees at Summit were generally optimistic about demand—not just about data centers but also in sectors as diverse as solar and pharmaceuticals. Even so, several analysts and economists pointed to concerns about “affordability”—whether that’s a new car, a new home, insurance, or childcare. 

Goods and (especially) services cost too much for too many people. The consumer has been taking a licking and keeps on ticking, as the old Timex watch slogan goes. But at what point do higher prices (and especially for gas and diesel) for everything start to make a dent?

It’s Labor Day, so let’s think about labor talks

That said, there are risks of even tighter supplies as well. We learned earlier this week that the United Steelworkers (USW) union, U.S. Steel, and Cleveland-Cliffs have agreed to extend contract talks for another 30 days. That’s par for the course, and I think it was widely expected. 

And typically—as we saw in 2022, the last time labor contracts were negotiated between the three—it’s hard for one steelmaker (U.S. Steel reached a tentative deal with the USW in November 2022) to hold out once another (Cliffs reached an agreement in August 2022) has shaken hands with the USW. 

But in some respects, 2022 was easier. There was a general acknowledgement that critical workers—who’d shown up on the job throughout the pandemic and who were grappling with a bout of inflation—deserved a raise. And both Cliffs and U.S. Steel were very profitable for most of 2022. 

The rhetoric between the union and the two steelmakers has been tame to date, especially compared to the heated rhetoric we saw in 2022 between U.S. Steel and the USW. But in some respects, the problems might be trickier this time. 

Inflation means workers will want a raise. And it’s no secret that Cliffs has struggled this year. My money is still on a deal or another extension. Even so, it’s worth keeping an eye on the issue in the weeks ahead.

In the meantime, thanks to all of you from all of us at SMU for your support. We hope you enjoy the long weekend with friends and family!