For what it’s worth, the last USS price hikes we have on SMU’s price announcement calendar – and it’s possible we missed one along the way – are two up $100/st from October 2023. (Two in one week at that.) This year has been mostly a story of Nucor and Cleveland-Cliffs as far as price announcements goes.

The next question: Do other steelmakers follow USS? And what does Nucor do when it next updates its published spot HR prices on Monday? Nucor is at $720/st now. Does it go to $750/st?

Let the speculation begin!

Let’s start with some fresh data and news from today’s newsletter.

November scrap shows early indications of a “strong sideways” move. That might help put a floor under things.

But it’s hard to square a big move upward with some of our other data. Case in point: 93% of respondents to our steel market survey this week said that domestic mills were willing to negotiate lower prices.

We haven’t seen a reading like that since early July. Why does that matter? We started July with HR at $665/st on average. By the end of the month, the low end of our range had dropped to $600/st.

Where does up $30/st put U.S. Steel’s HR price? Depending on where you started, I’m going to guess roughly $750-770/st. We haven’t seen prices that high since April.

Then there is the matter of lead times. They’re down across the board. HR, CR, and coated lead times – while not terrible – are all back to the lowest levels we’ve seen since the July price swoon.

You could make the case that our survey data, which we collected Mon.-Weds., is backward looking. Maybe we picked up on some last-minute deal-making ahead of price hikes (assuming other mills follow). We’ve certainly seen that before.

Here come the tons

But, turning back to what we know now, it’s probably not surprising that lead times are down. Look at SMU’s fall maintenance outage calendar.

Many of those outages have concluded or will be wrapping up soon. And, speaking of U.S. Steel, as we get toward the end of the year, there will probably be more production from Big River Steel 2 (BRS2), the big capacity expansion the steelmaker is undertaking in Osceola, Ark.

It’s not like BRS2 flips a switch and another 3 million tons per year (tpy) comes into the market all at once. There will probably be trials and qualifications toward year end. And perhaps not a more significant ramp-up until Q1’25. Even so, those tons are coming.

Meanwhile, other newer mills – SDI Sinton in Texas, for example – continue to work the kinks out. The Fort Wayne, Ind.-based steelmaker said Sinton, which also has capacity of 3 million tpy, should be operating at 75% this quarter, up from 72% in Q3. And it should hit full capacity in 2025.

North Star BlueScope in Delta, Ohio, meanwhile, is settling into a similar run rate (~3 million tpy), following the addition of a third EAF and second caster.

It’s a similar story on coated, where there is also a lot of new capacity coming online. Maybe that’s why coated prices have been slow to respond to a massive trade case.

Then there is just the matter of the calendar. Lead times for hot rolled are around Thanksgiving. Those for cold-rolled and coated products are into roughly mid-December. In other words, when prices often cycle down along with industrial activity during the holiday season.

I’m not saying the increase is doomed

We saw a round of price increases in late July stabilize sheet prices and then spark a mini-rally that got HR back to roughly $700/st by late August. HR prices then held there for most of September and October before declining modestly in recent weeks. Maybe a fresh round of price hikes keeps tags from sliding again.

And as SSAB noted in its earnings call, US buyers tend to stay in “wait-and-see” mode ahead of an election. As for elections, remember the “Trump bump” in 2016? HR prices went from $480/st just before election day in early November 2016 to $630/st shortly after inauguration day in late January 2017.

Could we see TB2 this year? Or maybe a Harris High? (Give me a break. It’s late, and I’m struggling with alliteration and rhymes.)

Heck, you could probably make a case that we’ve been in a demand funk for the last couple of years (despite all the price volatility). Maybe that’s due to change in 2025? And what might drive that?

Whatever happens, I’m guessing the days of two $100/st increases within the span of a week are gone, especially with Nucor posting more incremental ups and downs on a weekly basis.

Tampa Steel Conference

Speaking of the new year (yes, that was a shameless segue), get ahead of the crowds and book your spot for the Tampa Steel Conference on Feb. 2-4, 2025. It’s peak season for tourism in Florida, and our room blocks (and rooms in general) tend to go fast.

Whatever the supply-demand situation is, we’ll have no shortage of things to talk about – a new president, potentially sweeping new trade policies, and whatever unexpected events might happen between now and then.

One thing is sure, if you’re in the Midwest like me, it’ll be a nice excuse to get out of the cold and spend a few days in the Florida sun with a few hundred of your best friends in steel.

You can register here. We’ll be providing more updates on speakers and the agenda soon. In the meantime, thanks to all of you from all of us at SMU for your continued support. We appreciate you.

“SSAB Americas reserves the right to re-quote any open offers not confirmed by an SSAB order acknowledgment,” Chris Oggenfuss, director of commercial strategy and sustainability products sales, said in the letter.

SSAB Americas is a subsidiary of Swedish steelmaker SSAB. It operates two plate mills in the US: one in Montpelier, Iowa, and another near Mobile, Ala.

The company has not announced a price increase since last year. It last posted a price hike (also of $60/st) on Nov. 28, 2023, according to SMU’s price announcement calendar.

Plate prices have fallen steadily but significantly over the last year. SMU’s plate price now stands at $910/st on average. That’s down 3.2% from $950/st a month ago and 38.3% from $1,475/st a year ago.

The ABI is a leading economic indicator for near-term nonresidential construction activity. It is said to project business conditions approximately 9-12 months in the future, the typical lead time between architecture billings and construction spending. An index reading above 50 indicates an increase in architecture billings, while a reading below that indicates a decrease.

“Despite recent rate cuts by the Federal Reserve, many clients remain on the sidelines with regard to proceeding on planned projects,” AIA Chief Economist Kermit Baker said in a statement. “And while new project opportunities also emerge, clients are cautious about which to pursue.”

He noted that work backlogs remain above pre-pandemic levels, indicating that there is still active work in the pipeline.

As it has since mid-2020, the Project Inquiries Index remained in optimistic territory in September at 51.6. This index has trended lower after peaking late last year. The Design Contracts Index continues to recover from the June low but remains weak at 48.3.

All four regional indices indicated declining billings in September (Figure 2, left). The Southern region was the only regional index to move higher from August to September, it’s third monthly increase. The Northeastern, Midwestern, and Western Indices all declined for the second consecutive month, with indices ranging from 42.6-46.4.

Each of the sub-sector indices also indicated continually declining billings in September (Figure 2, right).  The Institutional Index saw slight growth compared to the month prior, while commercial/industrial, multifamily residential, and mixed practice indices all declined further.

An interactive history of the September Architecture Billings Index is available here on our website.

CME HRC futures

The ongoing softness in the underlying physical market has been well-reported and is well-known. It stems from relatively short lead times, adequative service center inventories, and lackluster end-user demand. All of these have consequently weighed on futures values. The lower levels, however, have attracted some buying interest, particularly in the forward positions, such as calendar-year (CY) 2025 and CY2026.

Much of the recent focus has been the December 2024 HRC contract, which has fallen by $65 per short ton (st) since I wrote my last column at the end of September. It went from $775/st to $710/st, as of Thursday’s provisional close. Fund positioning, and rolling from November ’24 to December ’24, has been the main catalyst in the prompt portion of the futures complex. The December 2024 position now makes up more than 30% of open interest for the HRC contract, or roughly 157,000 st of the 505,000-st total open volume.

Notably, the contango structure has widened as December ’24 HRC has fallen, while the December ’25 contract is down only $10/st since the end of September. That puts the December-to-December carry at $94/st. Uncertainty surrounding the upcoming election and implications of potentially more tariffs, combined with the coated trade case, have kept 2025 levels firm relative to the physical dynamics weighing on the front of the curve.

CME BUS futures

Surprisingly, the CME busheling (BUS) contract came to life today, after months of negligible activity. On Thursday, 740 gross tons (gt) of CY2025 traded in the CME block market, as several traders felt the structure through next year was roughly flat to spot and traded it. We’ve heard the CME remains committed to launching a Chicago-indexed busheling contract, and may provide an official market notice on its plans early next month.

Negotiation rates by product

As seen in Figure 2, negotiation rates increased this week for all sheet and plate products and are now up to levels last seen in July. Negotiation rates were highest for coated and cold-rolled products. The largest gains from our prior survey were seen in plate and cold-rolled rates. Negotiation rates by product this week are:

• Hot rolled: 88%, up nine percentage points from Oct. 9 and the highest rate recorded since mid-July.
• Cold rolled: 94%, up 21 percentage points and the highest rate since early July.
• Galvanized: 100%, up 12 percentage points and the highest rate since mid-July.
• Galvalume: 100%, up eight percentage points and the highest rate seen since May 2023.
• Plate: 90%, up 27 percentage points from an eight-month low and the highest rate since late July.

Here’s what some survey respondents had to say:

“Depends on the mill, but volume [hot rolled] orders carry a discount.”

“Larger buys are getting better prices.”

“Plate mills are hungry for work. Mills who haven’t been participants are now calling regularly.”

“Can buy much lower pricing for significant tons.”

“Depends on how many [hot rolled] tons you want to buy.”

Note: SMU surveys active steel buyers every other week to gauge their steel suppliers’ willingness to negotiate new order prices. The results reflect current steel demand and changing spot pricing trends. Visit our website for an interactive history of our steel mill negotiations data.

The construction industry added jobs for the fifth straight month, a theme driven by a limited workforce unable to keep pace with demand. It continues to boost the construction job market.

“Beyond the construction industry, this jobs report blew past expectations,” said Anirban Basu, ABC’s chief economist, noting, “US employers added 254,000 jobs for the month, the most since March.”

Nonresidential construction employment increased by 17,900 net positions, with growth in two of the three subcategories. Non-res specialty trade saw the largest boost with 17,000 added positions. Heavy and civil engineering added 3,800 jobs, while non-res building lost 2,900 positions.

“While the ongoing strength of the labor market and consumer spending indicates that the economy has weathered high interest rates better than anyone thought possible, the combination of rising household debt levels and economic uncertainty surrounding geopolitics and the looming election will potentially weigh on growth in the coming months,” added Basu.

The unemployment rate among jobseekers with construction experience was 3.7% in September, while unemployment across all industries decreased a percentage point from August to 4.1%.

Manufacturing activity declined in most districts, but two reported modest growth.

Some districts mentioned high interest rates, while others said housing activity continued to expand across the country. Uncertainty about the path of mortgage rates was still the culprit, keeping many on the sidelines.

The employment rate across all districts did increase slightly, though consumers were seen as increasingly sensitive to high prices, the survey found.

The Beige Book is a summary report of commentary on current economic conditions across the Federal Reserve’s 12 districts. It really is a book—it includes a ton of information. You can access the report for a deeper dive into economic activity in specific regions across the country.

Below is a summary of three of the districts, with a focus on manufacturing.

Philadelphia district

Business activity continued to decline in the Philadelphia district. Consumer spending fell modestly, and nonmanufacturing activity pulled back slightly.

Employment appeared to rise marginally after slipping in the last period. Wage growth continued at a modest pace, as did reported rises in input costs and prices. Expectations for future growth rose, becoming more widespread for both manufacturers and nonmanufacturers.

Chicago district

Activity increased slightly in the Chicago district, which includes northern Illinois and Indiana, southern Wisconsin, Michigan, and Iowa. Consumer spending rose modestly, as did employment. Construction and real estate activity were flat, and manufacturing activity edged down.

Prices were up modestly, wages rose moderately, and financial conditions loosened slightly.

San Francisco district

San Francisco, the Fed’s 12th district, encompasses the states of California, Oregon, Washington, Idaho, Nevada, Utah, Arizona, Alaska, and Hawaii.

Economic activity was steady in the region, though labor availability improved again with a positive move on wages. Overall prices were largely stable, though retail sales and activity in manufacturing and consumer services softened.

Demand for business services improved, while conditions in real estate, financial services, agriculture, and resource-related industries were largely unchanged.

Table 1 below summarizes current lead times and recent trends.

Compared to our Oct. 9 market check, the upper and lower limits for some of our lead-time ranges this week have changed:

• The longest lead time considered in our hot rolled range decreased from seven weeks to six weeks.
• The shortest lead time in our cold rolled range increased from four weeks to five weeks.
• The longest lead time in our galvanized range decreased from 10 weeks to eight weeks.
• The longest lead time in our Galvalume range decreased from nine weeks to seven weeks.

Figure 1 below tracks lead times for each product over the past two years.

Survey results

Over half of the companies we surveyed this week believe lead times will be flat two months from now. This rate is in line with our prior survey but down compared to prior months. Nearly a third forecast production times to extend further, also in line with early-October responses. However, this is up slightly from August and September results. The small remainder believe lead times will shrink further, similar to inputs received over the past two months.

We also asked buyers how they classify current mill production times. Most continue to respond that they are either shorter than normal (48%) or within typical levels (40%). A small portion of buyers said lead times are slightly longer than normal (12%).

Here’s what respondents are saying:

“[Lead times will contract as] there is way too much capacity domestically (especially after the fall outages wrap up), not to mention Mexico. Imports are still lurking, too.”

“Flat demand combined with compromised supply will help hold the line, at least somewhat.”

“Demand spike needed to extend lead times will not happen until CY25.”

“[Lead times will extend as] year-end inventory reductions will be behind us and people will be placing orders.”

“Our crystal ball is a little cloudy, but once we move past the election, we expect there to be an increase in business, which may impact mill lead times.”

“Lead times will contract through November and then begin to recover.”

“They will extend beginning when customers start placing more 2025 orders, so extend in about 4-6 weeks.”

“Hopefully extending in the new year.”

3MMA lead times

To smooth out the variability seen in our biweekly readings and better highlight trends, we present lead time data on a three-month moving average (3MMA) basis in Figure 2.

Through Oct. 23, 3MMA lead times were steady to down for both sheet and plate products. Overall, 3MMA lead times have trended downwards since February and remain near one-year lows. Sheet 3MMA lead times have begun to level out in recent months, while plate 3MMA lead times continue to slide lower.

The hot rolled 3MMA is now at 4.81 weeks, cold rolled at 6.67 weeks, galvanized at 7.04 weeks, Galvalume at 7.14 weeks, and plate at 4.07 weeks.

Note: These lead times are based on the average from manufacturers and steel service centers participating in this week’s SMU market trends analysis survey. SMU measures lead times as the time it takes from when an order is placed with the mill to when it is processed and ready for shipping, not including delivery time to the buyer. Our lead times do not predict what any individual may get from any specific mill supplier. Look to your mill rep for actual lead times. To see an interactive history of our steel mill lead times data, visit our website. If you’d like to participate in our survey, contact us at info@steelmarketupdate.com.

This was Lindqvist’s last time reporting as the leader of SSAB. Johnny Sjöström, the new president and CEO, will take over on Oct. 28.

SSAB Americas

The company’s Americas division, headquartered in Mobile, Ala., reported a cautious North American market in Q3. And it expects the same for the remainder of the year. At the same time, it remains upbeat on the region’s long-term potential.

Below are some key figures for SSAB Americas as disclosed in SSAB’s Oct. 23 interim report.

Revenues in the Americas declined 35% year-over-year, primarily as result of lower steel prices. But while prices have declined, they’re down from very high levels, Lindqvist said.

Quarterly steel shipments of 398,000 metric tons (438,720 short tons) declined 9% from a year earlier. Crude steel production plummeted 36% to 189,000 mt.

The company has now shipped ~100,000 mt of SSAB Zero, its US-produced green steel. It said it is still applying the €300/mt green steel premium to its fossil-free steel, HYBRIT.

SSAB said the shipment and production declines were primarily due to a ~€450 million maintenance outage at its plate mill in Montpelier, Iowa. The company had disclosed in its Q2 results that it would be moving up the planned outage into Q3 in anticipation of a better Q4.

An SSAB spokeswoman confirmed that the 27-day outage at the Montpelier mill was completed on Oct. 5.

Demand in North America

SSAB Americas reported declining demand for heavy plate in North America. And distributors are maintaining low inventory levels and continuing to be cautious with their buying as prices continue to slip.

Additionally, it’s typical in a US election year to see more “wait and see” from buyers as the election draws closer and through inauguration day, Lindqvist noted.

Thus, the Q4 outlook for the Americas segment is mixed: SSAB expects a 5-10% rise in shipments, but a 5-10% decline in steel prices vs. Q3. At the same time, it expects raw material costs to be higher.

Energy—notably wind and other renewables—was the only bright spot in the demand outlook for Q4:

SSAB remains optimistic about the long-term prospects of a “structurally undersupplied” US plate market, Lindqvist said. He cited the country’s massive infrastructure and renewable energy needs as positives driving heavy plate demand into the future.

With better capacity utilization rates, cost position, and quality than its competitors, SSAB Americas is well positioned despite a tough market, he said.

Regardless of the outcome of the presidential election, Lindqvist said, “We will continue to work hard to make sure that [SSAB Americas is] the relevant producer in the US with the strongest market share.”

According to the executive, interest in SSAB’s green steel products continues to grow, with “huge interest” from the construction, heavy transport, and automotive sectors.

Europe

SSAB said that weak demand continues to plague the European markets. The company plans to perform Q4 maintenance outages at its mills in Oxelösund, Sweden, and Raahe, Finland.

“Further adjustments to the low demand will take place in the steel divisions within the framework for flexible working hours and a restrictive approach to costs,” SSAB added.

In Europe, the company reported Q4 prices to be down 5-10% and shipments to be 0-5% lower vs. Q3.

Lindqvist offered the US as an example when an analyst inquired about decarbonization in the European steel industry. The US steel industry was able to change from mostly big, integrated producers to “highly cost-efficient, highly automated, very flexible mini-mills,” he pointed out.

“And I think that is where Europe, over time, will head as well,” he continued, with more mini-mills and high-quality producers in the market. “And SSAB will definitely be one of them, if not the leading one,” he added.

“It kind of sounds like you’re going to end up being the ‘Nucor of Europe’,” the analyst said.

Lindqvist responded: “I would love to be…the ‘Nucor of Europe’ because they are a very impressive company.”

Special steels

SSAB Special Steels also reported cautious activity in North America in Q3.

It said demand weakness continued in Europe, noting, “Besides the seasonal downturn, a weaker underlying market could be noticed.”

For special steels, SSAB expects Q4 shipments and prices to decline 0-5% vs. the previous quarter.

SSAB Group Results

All told, the SSAB Group’s quarterly results declined almost across the board from last year.

Recall we had a similar scenario last year. After November, it was obvious scrap prices needed to rise. Mills entered the December market up $50 per gross ton for #1 Busheling but were rebuffed by dealers who thought that price was insufficient. The market rose even higher as mills scrambled to fill their needs.

Can the same thing happen this year? Probably not to that degree, as HRC prices were much higher last year. But with winter coming, industrial scrap generation on the decline, and the scrap market bouncing off the bottom, it’s likely something will have to give.

This week’s RMU newsletter reported a study released by the knowledgeable Phillip Bell of the Steel Manufacturers Association (SMA). The study seeks to validate the conclusion that there will be enough scrap to decarbonize the world’s steel industry as the integrated process is replaced by EAF melting.

Many players have theorized there is not sufficient scrap available to accomplish this transition. The study laid out data to prove the recycling of steel items will improve from an average of about 40 years to about 25 years. This improvement in the recycling life-cycle of steel items should replenish the scrap reservoir more than enough to meet the increased demand for scrap.

I am not one who has even the thought of disagreeing with the results of this study. However, the main focus of it is obsolescent scrap. I have to agree that there should be enough of this type of material even if the recycling time extends beyond the 25-year term.

The EAF transition will involve a significant number of mills producing HRC, and they will need industrial scrap for the process. There probably will be immense pressure on these grades, just as there is in the US when demand for HRC is robust. So, for the transition to EAF, using ore-based metallics (OBMs) (pig iron and HBI/DRI) to supplement low residual scrap and neutralize the alloys in obsolescent scrap will be essential. This is very doable if the right investments are made. But it will come at a cost. My compliments to the SMA for conducting this study.

“Please communicate the details of this increase to our customers as soon as possible,” James Bruno, SVP of business development and president of U.S. Steel’s mill in Kosice, Slovakia, said in the letter.

U.S. Steel’s price hike comes after Nucor, ones of its competitors, kept its prices flat this week at $720/st. The Charlotte, N.C.-based steelmaker had cut them by $10/st a week earlier. Nucor will next update its prices on Monday.

U.S. Steel has not announced a price increase since October 2023, when it tried to raise sheet prices by $100/st, according to SMU’s price announcement calendar. That was before Nippon Steel announced its planned acquisition of the company in December of last year.

For its review of the AD on Mexican heavy walled rectangular welded pipe and tube, Commerce is considering the one-year period ended Aug. 31, 2023.

The agency this week preliminarily determined higher dumping margins for three Mexican companies.

The weighted-average dumping margin for Maquilacero SA de CV/Tecnicas de Fluidos SA de CV was raised to 7.22% vs. 5.06% in the prior review.

The rate for Productos Laminados de Monterrey SA de CV (Prolamsa) was also increased from 1.61% previously to 8.13%.

Commerce will issue the final results of this administrative review in late February.

Welded structural pipe from Turkey

Commerce also recently finalized an administrative review of the subsidies received by Turkish companies shipping large diameter welded structural pipe to the US in 2022.

The final CVD rate for Çimtaş Boru Imalatari Ticaret was lowered from 3.72% previously to 2.18% for 2022, while HDM Çelik Boru Sanayi Ve Ticaret’s rate was increased from 3.72% to 6.31%.

Of note: A five-year sunset review of this CVD order and the correlating AD order is currently underway to determine if the duties should be allowed to expire. These duties were first instituted in 2019, making this their first sunset review.

Commerce completed its expedited CVD review earlier this year. It found that Turkish manufacturers would still receive countervailable subsidies of 3.72% if the order is revoked.

The International Trade Commission opted for full sunset reviews of the duties and won’t issue its final injury determination until April 2025.

Note that while the live webinar is free, a recording will be available only to SMU subscribers. So reach out to us at info@steelmarketupdate.com if you don’t subscribe but would like to.

Leibowitz always brings interesting ideas to the table – whether you agree with them or not. He represents steel consumers and often provides a counterpoint to domestic steel producers’ perspectives. We’ll discuss points of agreement too. Like efforts to contain burgeoning exports from China (limited but not excluded steel products).

We’ll also talk about trade policy: From the coated trade case and USMCA to tariffs and the limits of presidential powers when it comes to trade. We’ll delve into the upcoming election as well. What would a win for former President Trump mean for steel? What about a victory for Vice President Harris?

And we’ll also take your questions – so make sure to bring some good ones to the Q&A.

Editor’s note: You can see all of our upcoming Community Chats – including one on Nov. 13 at 11 a.m. ET with Wolfe Research Managing Director Timna Tanners – here.

SMU’s check of the market on Tuesday, Oct. 22, put average domestic HR tags at $685 per short ton (st), down $5/st from the week before. US hot band did rebound from July’s 20-month low, but prices have not shifted much. The average domestic hot band price is presently just $50/st above the recent bottom of $635/st in late July.

Domestic HR is now theoretically 5% more expensive than imported material. That’s just a touch higher than last week’s reading of 4.7%. While increases in the premium have been insignificant at times, prices are still up from late July, when stateside products were ~12% cheaper than imported HR.

In dollar-per-ton terms, US HR is now, on average, $34/st more expensive than offshore product (see Figure 1). That’s up $2/st vs. last week and up $106/st from late July when US tags were ~$72/st cheaper than offshore material.

The charts below compare HR prices in the US, Germany, Italy, and Asia. The left-hand side highlights prices over the last two years. The right-hand side zooms in to show more recent trends.

Methodology

This is how SMU calculates the theoretical spread between domestic HR coil prices (FOB domestic mills) and foreign HR coil prices (delivered to US ports): We compare SMU’s weekly US HR assessment to the CRU HR weekly indices for Germany, Italy, and East and Southeast Asian ports. This is only a theoretical calculation. Import costs can vary greatly, and that can influence the true market spread.

We add $90/st to all foreign prices as a rough means of accounting for freight costs, handling, and trader margin. This gives us an approximate CIF US ports price to compare to the SMU domestic HR coil price. Buyers should use our $90/st figure as a benchmark and adjust up or down based on their own shipping and handling costs. If you import steel and want to share your thoughts on these costs, please get in touch with the author at david@steelmarketupdate.com.

Asian HRC (East and Southeast Asian ports)

As of Wednesday, Oct. 23, the CRU Asian HRC price was $465/st, a $15/st decrease vs. the week prior. Adding a 25% tariff and $90/st in estimated import costs, the delivered price of Asian HRC to the US is approximately $672/st. As noted above, the latest SMU US HR price is $685/st on average.

The result: US-produced HR is theoretically $13/st more expensive than steel imported from Asia. Despite the week-over-week (w/w) increase, it is still quite removed from late December, when US HR was $281/st more expensive than Asian products.

Italian HRC

Italian HR prices inched $2/st higher this week to $549/st, according to CRU. After adding import costs, the delivered price of Italian HR is, in theory, $639/st.

That means domestic HR coil is now theoretically $46/st more expensive than imports from Italy. The spread is down $7/st w/w as US tags edged lower vs. a slight increase in Italian prices. Recall that US HR was $297/st more costly than Italian hot band just five months ago.

German HRC

CRU’s German HR price moved $4/st lower to $552/st this week. After adding import costs, the delivered price of German HR coil is, in theory, $642/st.

The result: Domestic HR is theoretically $43/st more expensive than HR imported from Germany, down $1/st w/w. Stateside hot band was at an $18/st discount just about a month ago. At points in 2023, in contrast, US HR was as much as $265/st more expensive than imported German hot band.

Notes: Freight is important when deciding whether to import foreign steel or buy from a domestic mill. Domestic prices are referenced as FOB the producing mill. Foreign prices are CIF, the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight, from either a domestic mill or from the port, can dramatically impact the competitiveness of both domestic and foreign steel. It’s also important to factor in lead times. In most markets, domestic steel will deliver more quickly than foreign steel. Effective Jan. 1, 2022, Section 232 tariffs no longer apply to most imports from the European Union. It has been replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. SMU still includes the 25% Section 232 tariff on prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.

When it comes to HR prices, some mills (notably certain producers in the Great Lakes region) are in the mid/high $600s/st. Others, particularly southern EAFs, are trying to hold the line at or above $700/st. That’s why our average price has been landing roughly in the middle.

There also appears to be a similar split when it comes to lead times. Mills in the South have longer lead times, which partly explains the higher pricing in the region.

It’s nothing new in this current market cycle. But it’s a change for those of us who’ve been around the market for a while. It used to be that EAF mills almost always had lower prices and shorter lead times – typically by design. If this remains the case, what’s driving the weakness in the North?

Momentum shifts lower

Some of you might be surprised that we adjusted our sheet momentum indicators to lower from neutral. Why change them now?

For starters, our HR price has declined for three weeks in a row now. Those declines might be modest. But the ones we’re seeing on galvanized have been steeper. Also, service center inventories – while down from August – remained high in September. (We’ll post October inventories in mid-November.)

Meanwhile, most steel buyers continue to tell us that mills are willing to negotiate lower. More than 80% of service center respondents say they are releasing less steel than a year ago. And more than half of respondents said they missed forecast last month, according to our survey results. (See slide 36.)

Maybe you’re surprised SMU didn’t bring its HR price down by more than $5/st. I could see the logic there too. We’re heading into what is often a slower time of year. Yes, mills might be slow to come out of maintenance outages. And, yes, new capacity could be slow to ramp up. But both will eventually happen.

The big picture

Frankly, we can speculate all day whether HR will go up, down, or sideways next week or next month. What’s also worth noting is the unprecedented stability we’ve seen in prices over the last couple of months compared to the last few years.

It feels almost weird to type that after writing “unprecedented volatility” so often since 2020. Or maybe as far back as 2017-18. Remember the swings on rumors about and then implementation of Section 232?

My colleague David Schollaert noted that Nucor’s CSP has been $710-730/st since Steel Summit kicked off (Aug. 26). SMU’s HR price over the same time has fluctuated in a narrow bandwidth of $685-$705/st.

Tariffs: beautiful or chaotic?

It will be interesting to see how long this period of stability lasts. Those of us who have been around for a while remember the initial chaos around Section 232.

What would happen to steel prices if tariffs (which former President Trump called the “most beautiful word”) were applied suddenly to a wide range of imported downstream goods – including those made by US allies?

We’ve got two weeks to election day in the US and three months until inauguration. You could make the case that that’s a 2025 question. But polls have been shifting lately toward Trump, so it’s one that’s been on my mind.

One theory is that tariffs will bring back manufacturing jobs to the US. Maybe. We saw billions invested in new domestic steelmaking capacity in the years after Section 232 was put in place. But is it safe to assume that something similar will happen when it comes to downstream goods – especially things like light vehicles and consumer products? How can you increase tariffs on such things without also stoking inflation?

Also, if the tariffs are deployed suddenly, what would happen to supply chains? Restarting idled domestic plants would take time. Building new factories would presumably even longer. What happens in the meantime?

I’m not trying to score partisan points here. Generally speaking, government initiatives don’t always produce the intended result. Programs aimed at promoting EV adoption, for example, haven’t really panned out to date. EVs remain (mostly) status symbols. And they’re still not practical for the long distances US drivers drive.

What about you: How do you think a new tariff regime might play out, or is it just too early to say without knowing specifics? Let us know at info@steelmarketupdate.com!

SMU Community Chat on Oct. 30 at 11 a.m. ET

Barry Zekelman, executive chairman and CEO of Zekelman Industries, touched on some of these topics last week during an SMU Community Chat webinar. Our next Community Chat will be Wednesday, Oct. 30, at 11 a.m. ET with Lewis Leibowitz, a frequent contributor to SMU.

Leibowitz and Zekelman have at times sparred in these pages. So my guess is that Leibowitz might have a slightly different view. (But not on everything. Both agree that burgeoning Chinese exports are a problem.) In the meantime, you can learn more and register here.

And, most importantly, thanks to all of you for your continued support of SMU. All of us here truly appreciate it.

“I love where Nucor sits. I love our growth strategy and the markets that we’re going to serve, because they’re underserved,” Leon Topalian, Nucor chair, president and CEO, commented on the call.

Sheet mill group

Topalian cited as an example the company’s newest sheet mill being constructed in West Virginia. Nucor has a low market share in the Northeastern US, he said, so the 3-million-short-ton-per-year mill will allow it to bring its products to markets where it’s currently underrepresented.

Nucor broke ground on the mill in Apple Grove, W.Va., a year ago. It expects to begin operations there by the end of 2026, with “really meaningful volumes” in 2027, Topalian said.

He also revealed updates on other steel sheet investments, including the commissioning of a new continuous galvanizing line and prepaint line at its sheet mill in Crawfordsville, Ind., planned for next year.

The $290-million investment, first announced in 2022, will add 300,000 short tons per year (stpy) of construction-grade galvanizing capacity and 250,000 stpy of prepaint capabilities.

The company also plans to complete the construction of two utility tower manufacturing facilities next year. One is located adjacent to the Crawfordsville sheet mill, and the other is next to its sheet mill in Decatur, Ala.

Additionally, a new automotive-grade galvanizing line at Nucor Steel Berkeley in Huger, S.C., is expected to be commissioned mid-2026, Topalian said.

Plate group and Brandenburg mill

As you may recall, Nucor reorganized its plate mill group last year, closing its Longview, Texas, mill and shifting production to its new 1.2-million-short-ton-per-year plate mill in Brandenburg, Ky.

“In general, we’re incredibly optimistic about our plate group, the things that are going on against the backdrop of the plate market, and in particular, Brandenburg, as it’s continued to ramp up,” Topalian said on Tuesday’s call. He noted that “Brandenburg has achieved EBITDA positive.”

While the utilization rate of the Brandenburg mill was ~20% last quarter, there have since been, and will continue to be, utilization and quality improvements, according to Brad Ford, EVP of plate and structural products.

He said Nucor will “continue to ramp up Brandenburg thoughtfully and methodically,” and reminded those on the call that the mill “was built to expand the capabilities of the plate group portfolio.”

Customers are enthusiastic about the added capabilities for Nucor’s plate mill group, Ford said, as Brandenburg can produce certain grades and sizes that its other plate mills in Hertford County, N.C., and Tuscaloosa, Ala., cannot.

He added that customers are “excited about sourcing a domestic sustainable product out of Brandenburg.”

Capital expenditures

Topalian noted that, “While it can take time for large projects like these to reach their full earnings potential, our team has a strong track record of safely doing whatever it takes to get there.”

“Moving forward, we’ll continue to seek ways to further diversify by investing in higher-margin businesses that are less cyclical and more aligned with secular growth trends,” he added. “We have seen this play out in 2024 as returns from our steel product segment have shown more resilience than our steel mills.”

The company lowered its 2024 capital expenditure projections by $300 million to $3.2 billion, with about two-thirds of that total slated for growth projects, according to CFO and EVP Steve Laxton. He estimated the company will continue to have elevated capex “somewhere around that $3 billion level, maybe a little bit above” that for the next year or two.

Buyers see no strong indications that the market will move upward in the near future, especially with the election and holidays right around the corner. As previously reported, mill lead times remain short, and the majority of buyers say mills are willing to talk price on new orders.

In light of this, SMU’s sheet price momentum indicator has been adjusted from Neutral to Lower this week. Prior to this week, sheet momentum had been at Neutral for six weeks. Recall that sheet momentum was previously at Lower earlier this year between May 7 and July 29. Our plate price momentum indicator remains at Lower, as it has been for nearly six months.

SMU’s hot-rolled steel index declined by $5/st w/w to $685/st this week, while cold rolled slipped $15/st to $925/st. Our galvanized index eased $20/st w/w to $880/st, while Galvalume held steady at $920/st. Plate prices fell $5 w/w to $910/st – a low not seen in more than three and a half years.

Hot-rolled coil

The SMU price range is $650-720/st, averaging $685/st FOB mill, east of the Rockies. The lower end of our range is down $10/st w/w, while the top end is unchanged w/w. Our overall average is down $5/st w/w. Our price momentum indicator for hot-rolled steel has been adjusted to lower, meaning we expect prices to decline over the next 30 days.

Hot rolled lead times range from 3-7 weeks, averaging 5.0 weeks as of our Oct. 9 market survey. We will publish updated lead times this Thursday.

Cold-rolled coil

The SMU price range is $880–970/st, averaging $925/st FOB mill, east of the Rockies. The lower end of our range is down $20/st w/w, while the top end is down $10/st w/w. Our overall average is down $15/st w/w. Our price momentum indicator for cold-rolled steel has been adjusted to lower, meaning we expect prices to decline over the next 30 days.

Cold rolled lead times range from 4-9 weeks, averaging 6.9 weeks through our latest survey.

Galvanized coil

The SMU price range is $840–920/st, averaging $880/st FOB mill, east of the Rockies. The lower end of our range is down $40/st w/w, while the top end is unchanged w/w. Our overall average is down $20/st w/w. Our price momentum indicator for galvanized steel has been adjusted to lower, meaning we expect prices to decline over the next 30 days.

Galvanized .060” G90 benchmark: SMU price range is $937–1,017/st, averaging $977/st FOB mill, east of the Rockies.

Galvanized lead times range from 5-10 weeks, averaging 7.1 weeks through our latest survey.

Galvalume coil

The SMU price range is $880–960/st, averaging $920/st FOB mill, east of the Rockies. Our range is unchanged w/w. Our price momentum indicator for Galvalume steel has been adjusted to lower, meaning we expect prices to decline over the next 30 days.

Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,174–1,254/st, averaging $1,214/st FOB mill, east of the Rockies.

Galvalume lead times range from 6-9 weeks, averaging 7.5 weeks through our latest survey.

Plate

The SMU price range is $820–1,000/st, averaging $910/st FOB mill. The lower end of our range is down $40/st w/w, while the top end is up $30/st w/w. Our overall average is down $5/st w/w. Our price momentum indicator for plate remains at lower, meaning we expect prices to decline over the next 30 days.

Plate lead times range from 2-6 weeks, averaging 4.2 weeks through our latest survey.

SMU note: Above is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is also available here on our website with our interactive pricing tool. If you need help navigating the website or need to know your login information, contact us at info@steelmarketupdate.com.

• John Deere Harvester Works in East Moline, Ill.: ~200 production employees  
• John Deere Davenport Works in Davenport, Iowa: ~80 production employees  
• John Deere Seeding and Cylinder operations in Moline: Seven production employees 

“It is important to note these layoffs are due to reduced demand for the products produced at these facilities. They are not related to production moves,” John Deere said in a statement to SMU (emphasis theirs).

The company noted that the layoffs this fiscal year result from the “weakening farm economy and a reduction in customer orders for our equipment.”

A survey of Iowa WARN Notices in Iowa going back to August shows:

• As of Sept. 20, 345 were laid off at John Deere Waterloo Works in Waterloo, Iowa.
• On Aug. 30, 211 workers were laid off at Davenport Works in Davenport, Iowa.
• Also on Aug. 30, 99 workers were laid off at John Deere Dubuque Works in Dubuque, Iowa.

As previously reported, the Moline, Ill.-based company has announced layoffs in the Midwest. It also plans to move production of skid steer and compact track loaders from Iowa to Mexico by the end of 2026, according to a report in Fox Business News.

“We are pleased to complete the acquisition of EWP,” said Insteel President and CEO H.O. Woltz III. “The acquisition of EWP will enhance our customer service capabilities and drive down operating costs through operational synergies.”

The acquisition also expands Insteel’s geographic footprint, better positioning it to serve the Midwest market, added Woltz.

Mount Airy, N.C.-based Insteel is an independently owned steel wire reinforcing product manufacturer serving the residential and non-residential construction sectors. It operates 12 manufacturing facilities across the US.

Further, Zekelman said the violations forced it to close a tube facility in Long Beach, Calif., in 2022, and another in Chicago (slated to close in 2025). More than 400 workers lost their jobs in the process.

“Mexico is violating trade agreements, and the Biden Administration is failing to enforce these rules,” Barry Zekelman, executive chairman and CEO, said in the statement.

“The American steel industry is being damaged, and American workers are paying a price,” he added.

The company said the “melt-and-pour” requirement issued in July by the Biden administration “will have little to no effect on surging Mexican imports of steel.”

Additional petitions

At the same time, the company has also filed other petitions at the national and state level, specifically with the state of Pennsylvania.

On the national level, Zekelman filed a Section 232 petition with the US Office of Homeland Security. The petition seeks to compel Secretary Alejandro Mayorkas to use the Office of Trade Relations to enforce trade agreements between the two countries.

At the state level, a Petition for Determination of Discrimination was filed in the Commonwealth Court of Pennsylvania. It states that Mexico is discriminating against steel conduit made in Pennsylvania and violating the “Pennsylvania Trade Practices Act (PTPA).”

The act was put into practice in 1968 to protect steel and aluminum products made in the state.

It made it unlawful for any public agency “to specify, purchase, or permit to be furnished or used, in any public works, aluminum or steel products made in a foreign country which has been determined as discriminating by the Court.”

Background

Though both signatories to the USMCA trade agreement, tensions between the US and Mexico have been mounting for some time on the supposed surge of Mexican steel imports into the US, which is disputed by Mexico.

To read an op-ed filed by Barry Zekelman on this issue last month, click here.

To read an opposing point of view from Salvador Quesada Salinas, director general of Mexican steel trade group Canacero, from the end of August, click here.

When asked for comment on the lawsuit, Canacero pointed to the article above.

As of Oct. 18, prices for iron ore, coking coal, steel scrap, zinc, and aluminum have all increased month on month (m/m). Pig iron prices have remained flat since July.

Prices for four of the seven raw materials are more expensive than they were three months ago. Some products fluctuated as much as 14% in that time. Table 1 summarizes the percentage changes from one month, three months, and one year ago for each product.

Iron ore

The import price of 62% Fe Chinese iron ore fines has spiked 14% over the past month, rising to a three-month high of $108 per dry metric ton (dmt) on Oct. 9. The latest weekly spot price has slightly eased to $106/dmt delivered North China (Figure 1). Iron ore prices are down 1% compared to levels three months ago and 10% lower than prices recorded this time last year.

Coking coal

Prices for premium hard coking coal have generally declined across the last year, reaching a three-year low of $182/dmt in mid-September. Prices have ticked 14% higher over the last month, rising to a two-month high of $207/dmt last week (Figure 2). Coking coal prices have declined 14% in the past three months and are 43% less than they were one year prior.

Pig iron

Pig iron prices have stabilized throughout the past year, hovering within a $35/dmt range over the last 14 months. As of October, prices have remained flat at $460/dmt, unchanged since July (Figure 3). Pig iron prices are 10% higher than levels one year ago. Recall that pig iron prices had jumped more than 60% in April 2022 following the invasion of Ukraine by Russia, reaching a historic high of $975/dmt.

Note that most of the pig iron imported to the US had come from Russia, Ukraine, and Brazil. This report uses Brazilian prices, averaging north and south port prices.

Scrap

Following their peak last December, steel scrap prices trended lower across the first seven months of this year, but have shown signs of recovery in recent months. SMU’s busheling and shredded scrap indices marginally increased from September to October; busheling scrap prices rose 3% m/m to $405 per gross ton (gt), shredded scrap ticked up 4% to $390/gt (Figure 4). Scrap tags are up 3-8% from prices recorded three months ago and are 1-5% higher than this time last year.

Changes in the relationship between scrap and iron ore prices offer insights into the competitiveness of integrated (blast furnace) mills, whose primary feedstock is iron ore, compared with mini-mills (electric-arc furnace), whose primary feedstock is scrap. Figure 5 compares the prices of mill raw materials over the past few years.

To compare these two feedstock materials, SMU divides the shredded scrap price by the iron ore price to calculate a ratio. A high ratio favors the integrated producers and a lower ratio favors the mini-mill producers.

As shown in Figure 6, integrated mills had mostly held the cost advantage between late 2021 through mid-2023. The advantage then briefly shifted to mini-mill producers in the second half of last year. After bobbing up and down this year, the ratio has favored integrated mills for the past three months.

Zinc and aluminum

Zinc is used in galvanized and other coated steel products. Prior to April, zinc spot prices had been relatively stable for almost a year. Prices surged in April and May, prompting some mills to increase their galvanized coating extras, then trended lower through early August. Since then prices have begun to rally again, climbing to a year-and-a-half high of $1.43 per pound (lb) earlier this month. The latest LME cash price for zinc is up 7% m/m to $1.40/lb as of Oct. 18. Zinc prices are 13% higher than levels three months prior and up 28% compared to October 2023 (Figure 7).

Aluminum prices, which factor into the price of Galvalume, have trended similarly to zinc prices. Aluminum prices climbed to a one-year high of $1.22/lb back in May, receded through August, then climbed again. The latest LME cash price has risen 1% over the last 30 days to $1.16/lb. Aluminum prices are 9% higher than tags three months prior and 18% greater than levels seen this time last year. Note that aluminum spot prices sometimes have large swings and return to typical levels within a few days, as seen in Figure 7.

Nucor’s profits dropped precipitously in the third quarter on lower prices in its steel mills segment, and the company expects a continued earnings slide for Q4’24.

The Charlotte, N.C.-based steelmaker posted net earnings of $249.9 million in the quarter ended Sept. 28, off 78% from $1.14 billion a year earlier. Net sales slid 15% to $7.44 billion in the same comparison.

“Nucor’s market leadership, product diversity, and strong balance sheet enable us to provide meaningful returns to shareholders and execute our growth strategy even in the face of market uncertainty,” Leon Topalian, Nucor’s chair, president and CEO, said in a statement after market close on Monday.

Steel mill segment hurts profits

The company cited a decline in average selling prices in its steel mills segment as the primary driver for decreased earnings quarter over quarter.

The average sales price per ton in Q3’24 fell 6% vs. the previous quarter and was off 15% from a year earlier.

The steel mill segment shipped 5,719,000 short tons (st) in the quarter, roughly level with 5,746,000 st in the same quarter last year. However, Nucor said shipments were down 3% sequentially.

Finally, the segment had earnings before income taxes and noncontrolling interests of $309.1 million in Q3’24, off 65% from a year earlier.

Scrap prices also declined in the quarter, the company said. The average scrap and scrap substitute cost per gross ton used in Q3’24 was $378. This was down 5% from $396 in the previous quarter and 9% from $415 in Q3’23.

Earnings also dropped sequentially in both the steel products and raw materials segments.

Outlook

Nucor expects net earnings in Q4’24 to fall from Q3’24 earnings of $1.05 per diluted share.

The primary reason: Anticipated weaker earnings in the steel mills segment caused by lower average selling prices and declining volumes.

The company expects a similar scenario in its steel products segment.

However, Nucor predicted that earnings in its raw materials segment would increase q/q (excluding an impairment charge).

“The government is ensuring Canadian workers and businesses are not unduly burdened by surtaxes on imports from China,” it added.

It further noted that remission won’t be granted for goods intended for resale in the same condition in the US.

Circumstances where remission would be considered include:

• “Situations where goods used as inputs, or substitutes for those goods, cannot be sourced either domestically or reasonably from non-Chinese sources;
• Where there are contractual requirements, existing prior to Aug. 26, 2024, requiring Canadian businesses to purchase Chinese inputs into their products or projects for a specified period of time; and,
• Other exceptional circumstances, on a case-by-case basis, that could have significant adverse impacts on the Canadian economy.”

Collection of the 25% tariffs on Chinese steel and aluminum products begins on Oct. 22, while the 100% tariffs on EVs started on Oct. 1.

Recall that earlier this month, China challenged the tariffs at the WTO.

Canadian steel, aluminum trade groups weigh in

The Canadian Steel Producers Association (CSPA) and the Aluminum Association of Canada (AAC) took a cooperative tone regarding remissions as long as they are applied judiciously.

“The Canadian steel and aluminum industries will continue working with the government to ensure a remission process that maintains the effectiveness of this critical tariff regime and that only applies in well-documented and unique circumstances,” the groups said in a joint statement on Tuesday.

Last week’s production was 4.8% lower than the year-to-date weekly average of 1,714,000 st. Weekly production is 2.0% less than levels recorded one year ago, when mill output totaled 1,664,000 st. 

The mill capability utilization rate last week was 73.4%. This is up from 72.9% one week prior and higher than the 72.4% rate at this time last year.

Year-to-date production has reached 71,069,000 st at a capability utilization rate of 76.4%. This is 1.8% less than the same time frame last year, when 72,337,000 st had been produced at a capability utilization rate of 76.4%.

Weekly production by region is shown below, with the weekly changes noted in parentheses:

• Northeast – 115,000 st (up 7,000 st)
• Great Lakes – 581,000 st (up 11,000 st)
• Midwest – 198,000 st (down 15,000 st)
• South – 686,000 st (up 5,000 st).
• West – 51,000 st (up 3,000 st)

Editor’s note: The raw steel production tonnage provided in this report is estimated and should be used primarily to assess production trends. The monthly AISI “AIS 7” report is available by subscription and provides a more detailed summary of domestic steel production.

A spokeswoman from SSAB told SMU that the company welcomed the EC’s decision and is now awaiting notification from the Swedish Agency.

“We hope to have a decision soon and look forward to implementing our transition to fossil-free steelmaking in Luleå at a high pace,” she added. 

The Commission said the aid would support SSAB’s transition from the current coal-based steel production process in Luleå, in northern Sweden, to a nearly zero carbon emission system.

The operation will use an electric-arc furnace (EAF), and there will be equipment for secondary metallurgy and a caster.

The support is expected to accelerate the project by three years, with the new project slated to start producing “green steel” by 2029. The mill will have an annual capacity of 2.5 million metric tons of green slabs.

“This will contribute to the greening of the steel value chain, in line with the EU’s target of climate neutrality by 2050. At the same time, the measure ensures that competition is not distorted,” Margrethe Vestager, EVP in charge of competition policy, said in a statement on Oct. 20.

Clarification: An earlier version of this article said the funding had already been awarded.

A CSP of $720/st puts Nucor’s HR price at the top of SMU’s range. Our Oct. 15 market check placed HR coil prices at $660-720/st, with an average of $690/st.

Nucor said it will offer lead times of 3-5 weeks, but customers should contact their district sales manager for availability.

West Coast CSP

Nucor also said it was keeping the CSP for HR coil from its West Coast joint-venture subsidiary, California Steel Industries (CSI), unchanged vs. last week at $780/st.

You can track this and other moves on SMU’s steel mill price announcement calendar on our website.

Last month I was in Stockholm, Sweden for the 2024 CRU Steel Decarbonisation Summit. I got to rub elbows with a lot of CRU folks I otherwise wouldn’t see siloed here in Austin, Texas. (I wrote about it here.)

One of those was Paul Butterworth, research manager at CRU Sustainability, a team formed in 2021. He gave a presentation titled “Energy Transition Session—Powering Transition: Energy, Technology, Infrastructure.” I was able to have a far-reaching conversation with him afterward, but one of his insights regarding the Carbon Border Adjustment Mechanism (CBAM) really struck me.

As we know, CBAM is one of the main sticking points to The Global Arrangement on Sustainable Steel and Aluminum between the US and EU. And although the can has been kicked on negotiations, there does not seem to be much daylight on this issue. For the US it’s a non-starter. For the Europeans it goes into effect next year.

When I asked him what he thought a compromise would look like, his response was, “Well, does, does there have to be a solution?”

While his further response will be explored in an upcoming article, the answer really woke me up.

The road to 2050 is not going to be a straight line. New technologies will emerge. Perhaps different climate roadmaps as well. I feel an advantage the American steel industry has is the ability to be nimble, and change quickly in response to the market if so required. The overarching solutions may in fact change based on small-scale initiatives taken by individual companies.

Likewise, challenges in global trade (such as in the USMCA at the moment), could lead to unique reorganizations in trading blocs. It remains to be seen.

Sometimes the lack of a solution can lead to something to else entirely. In this era of wait and see before the election, perhaps trusting the process, and knowing that something larger can grow organically from something small – rather than be arrived at by committee – can give some peace. Or relieve a little bit of stress. Ah, who am I kidding? Just crank up the Fox, the CNN, the MSNBC (whatever your poison), and enjoy the show.

Scanning the available literature, there are seven industries that lead the concerns for impact on Western economies:

1. Electrical machinery (electricity generation, semiconductors, solar energy)
2. Autos (electric vehicles, components)
3. Medical equipment and supplies (personal protective equipment, pharmaceutical inputs)
4. Textiles, apparel, and footwear (long a strong export sector for China, showing growth post-pandemic)
5. Steel and aluminum products
6. Chemicals and plastics (fertilizers, industrial goods)
7. Food and agriculture products (especially processed foods)

I have written many times about the policy mistakes that have caused this export boom, including the housing bubble and the one-child policy that distorted the Chinese economy. The Chinese government has changed course on those issues, but the after-effects will persist for a long time. With an aging and declining population, China risks losing its momentum as the “workshop of the world.”

The big problem is how to get through the next few years with minimum damage to Western economies. Right now, Western participants in the seven sectors listed above are concerned that they will be overwhelmed by Chinese exports before China can be reined in. I think that is a legitimate concern. 

What can reasonably be done to preserve Western manufacturing sectors without damaging consumers and industries that participate in global markets? 

There are three major categories of action. In some measure, all should be looked at. These are tariffs, quotas, and subsidies for domestic production.

Right now, most candidates and commentators are focusing on one:  trade restrictions on China. Trade restrictions generally take two forms: taxes (Section 232 and 301 tariffs, antidumping, countervailing duties and safeguards) or quantitative restraints (absolute quotas or tariff-rate quotas). 

There are obvious shortcomings to this approach. Trade restrictions protect domestic producers from foreign competition. That’s why domestic producers prefer tariffs. Consuming industries that depend on vigorous competition in the markets that supply them will be hurt. This could be perhaps irretrievably if trade restrictions in upstream markets diminish competition, which is why consumers don’t like tariffs. 

Controversy persists about who pays for tariffs, although there is really no room for doubt. Consumers in the importing country pay most of the cost of tariffs, and all the cost for quotas. Tariffs and quotas make goods more expensive, and that price increase is passed on to the customer. Like it or not, consumers in the United States and other Western countries are dependent on Chinese participation in our markets. Terminating that access suddenly will cause inflation, dislocation of manufacturers depending on Chinese materials and components, and a reduction in living standards. Tariffs and quotas are both regressive taxes, affecting lower-income consumers more than affluent ones. 

One difference between tariffs and quotas is who benefits from them. Tariffs are collected by governments, swelling their coffers. 

On the other hand, quotas reduce the quantity of goods in the importing market, forcing up the price of all goods, whether imported or domestically produced. Foreign exporters will make higher profits on the products they can sell, so that extra income will go offshore. 

The third course of action, subsidies, is also being tried, especially in Europe and the US. The clearest use of this strategy in the United States is in semiconductors, where the federal government has made big payouts to attract new semiconductor manufacturing to the United States. Taiwan is generally recognized as the leading source for the most advanced semiconductors. The strategic vulnerability of Taiwan to attack is one reason that Taiwanese manufacturers have looked overseas, and especially to the United States, to build new capacity. But less advanced semiconductors are also very important to US manufacturers. 

The key to subsidies is to create industries or producers that are competitive in free markets over the long haul. Major private investments will not be made if government support does not result in truly competitive companies. 

With all the shortcomings of the available remedies, there remains the considerable problem of China flooding world markets with more and more goods. No one in the West, with its democratic institutions, is able to counsel inaction. Our presidential campaign is one important example of this. 

One strategy that I hesitate to mention is negotiation to give China something and get something in return. Western unity of action could help make this idea more practical. China has some important comparative advantages in many of their growth sectors. Managed trade could help keep competition going, while making sure that Western industries are not devastated, perhaps for a long time, by China’s expansion. 

But negotiation requires compromise, and compromise requires recognition that both sides have merit. Coercive tactics, such as tariffs, quotas, and subsidies can help convince the Chinese and others that negotiation is a better approach than economic or military compulsion. 

At this point, neither major party candidate is showing commitment to compromise. We will have to wait until after Jan. 20, 2025, to see that. 

Editor’s note

This is an opinion column. The views in this article are those of an experienced trade attorney on issues of relevance to the current steel market. They do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at info@steelmarketupdate.com.

“This conversion will enable Nucor Steel to significantly increase its production capacity and get ready to meet future challenges in the steel industry,” SMS group said in a statement on Wednesday.

The conversion will allow Nucor to produce specifically engineered high-strength thin strip products.

The existing entry and exit-side furnaces will be replaced with state-of-the-art closed-type furnaces to better maintain material temperature.

The upgrade will add an additional mill stand downstream of the existing stand. Both stands will operate in tandem for reversing roughing passes and finishing passes, SMS group said. A looper will be positioned between the stands to optimize strip tension and speed control.

The electrical and automation systems in the mill will also be modernized by SMS group.

Nucor has an annual plate production capacity of approximately 3 million tons of cut-to-length and discrete plate. It produces plate for several military and manufacturing applications including construction, heavy equipment, mining, energy, infrastructure, oil and gas, and transportation. The steelmaker has plate facilities in Cofield, N.C., Brandenburg, Ky., and Tuscaloosa.

Four out of five ITC commissioners voted on Oct. 4 to conduct full reviews, according to a notice from the agency. The duties were first put in place in 2001; this is the fourth time they are up for review.

Domestic producers acting as ‘interested parties’ in the review include Nucor, SSAB, Steel Dynamics Inc. (SDI), U.S. Steel, AM/NS Calvert, and Cleveland-Cliffs.

The Commission said it didn’t receive any responses from interested parties in China, India, Indonesia, Taiwan, or Thailand. Responses from Ukraine were inadequate.

“Notwithstanding the inadequate respondent interested party group responses in each review, the Commission found that other circumstances warranted conducting full reviews,” the ITC said in an explanation of its adequacy determination.

Background

Sunset reviews, conducted every five years, decide if the import duties should continue or be allowed to expire.

In a full review, the ITC will hold a public hearing and issue questionnaires to HR producers, both foreign and domestic.

Full reviews will take longer than expedited reviews as the Commission doesn’t conduct a hearing or investigate further. It relies solely on facts available from prior reviews and the Commerce Department.

The full sunset review that is the focus of this story concerns ADs on HR imported from China, Taiwan, Thailand, and Ukraine, and CVDs on HR from India, Indonesia, and Thailand.

ITC will determine if removing the duties (i.e. allowing them to ‘sunset’) would be likely to injure the domestic market.

They cover certain HR carbon steel flat products, including high-strength low alloy (HSLA) steel and the substrate for motor lamination steel.

Sunset reviews in recent years

It could be argued that sunset review cases generally result in the continuation of import duties.

But as SMU has mentioned before, it’s become a trend in recent years to see the removal of duties on Brazilian steel while simultaneously upholding duties on the same imports from other countries.

In 2022, the ITC voted to allow duties to expire on Brazilian HR coil and cold-rolled coil. And in 2023, duties were allowed to expire on Brazilian cut-to-length plate and welded pipe.

In the review of duties on HRC finalized two years ago, ADs and CVDs on Brazilian product were allowed to expire. At the same time, the ITC voted to continue the duties on HR steel from Australia, Japan, the Netherlands, South Korea, Turkey, the United Kingdom, and Russia.