Nippon Steel is one of the largest steel companies in the world. And the company earned record high business profits in 2023, reaching JPY 935 billion (more than US$6 billion) – a 27% increase from 2022. The company has also bid US$14.9 billion in an all-cash proposal to acquire U.S. Steel. Clearly, Nippon Steel has the cash-on-hand and credit facilities needed to make significant capital investments. Yet, the company is seeking subsidies from the Japanese government to fund converting its blast furnaces to electric furnaces.

Nippon Steel does not need this aid. Electric furnaces are a widely adopted and proven technology. And Nippon Steel’s continued efforts to shift toward greater electric furnace-based steelmaking highlight that electric furnaces can make all types and grades of steel, as we have commented previously. American producers like Nucor and Steel Dynamics have been developing and employing electric furnaces for decades. Further, Nippon Steel is already planning to make these and other green steel investments. This is because the company’s largest customers (e.g., global auto manufacturers) and anticipated regulatory requirements demand that they invest in decarbonization. In fact, Nippon Steel built a new electric furnace in 2022 at its Hirohata Works, which it now seeks to expand under this government program.

Electric furnaces are also cheaper to build than the blast furnaces they replace due to their far lower initial capital expenditures and greater operational flexibility. Similarly, direct-reduced iron (DRI) plants have been constructed with private funding, and it is much less expensive to build combined electric furnace and DRI operations than a greenfield integrated mill. Indeed, over the last 40 years, many electric furnaces have been built across the North America and Europe. But no greenfield integrated facilities have been built on either continent.

Still, rather than pledging to invest in green technology in the United States, as part of its bid for U.S. Steel, Nippon Steel has committed $2.7 billion more to support blast furnace production in the United States. That includes a promise to reline a blast furnace at U.S. Steel’s Gary Works, which would extend that furnace’s life by at least another two decades.

For this reason, many steel and environmental groups have criticized Nippon Steel’s proposed takeover of U.S. Steel. For instance, Mighty Earth has chastised the proposal. The group finds that it “completely contradicts the urgent call of the climate crisis and misses opportunities for immediate action.” Similarly, SteelWatch has described Nippon Steel’s commitment to expand coal-based production at U.S. Steel’s Gary and Mon Valley Works as “planning to lock in high-emission steel production for decades.” It has also said the plans are “unfit to meet the task of bring both Japanese and American steelmaking into the 21^st century.”

Importantly, as the countervailing duty laws establish as a basic tenant – money is fungible. That is, if a company is given a $1-billion subsidy for one aspect of its business, that frees up $1 billion for it to spend on other projects. This is especially so for a sophisticated, multinational corporation like Nippon Steel. By seeking a government hand-out to pay for its blast furnace conversion in Japan, Nippon Steel is effectively taking free money from the Japanese government. It can then use that money to pay for its other business endeavors, such as paying off the debt related to its acquisition of U.S. Steel.

Nippon Steel appears to be taking advantage of nominally green subsidies in Japan to offset the costs of its acquisition of steel production in the United States. And it may try to double-dip. Not only will Nippon Steel take Japanese subsidies, but when it is left with high emissions hot-end production in the United States, we would not be surprised if Nippon Steel turns to the US government with its hands out for more subsidies by threatening to stop production at these facilities altogether. That is not good for the American steelworker or taxpayer.

Editor’s note

This is an opinion column. The views in this article are those of experienced trade attorneys 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.

Third quarter ended Sept. 30	2024	2023	Change
Net sales	$3,420.3	$3,623.0	-5.6%
Net income (loss)	$199.2	$295.0	-32.5%
Per diluted share	$3.61	$4.99	-27.7%
Nine months ended Sept. 30
Net sales	$10,708.4	$11,468.6	-6.6%
Net income (loss)	$769.9	$1,063.2	-27.6%
Per diluted share	$13.55	$17.92	-24.4%

While Reliance’s Q3 sales of $3.42 billion were down 5.6% from last year, net income dropped by nearly a third to $199.2 million.

The Scottsdale, Ariz.-based company said tough pricing conditions, with marked declines in carbon steel and aluminum prices, drove the earnings decline.

“Although metals pricing declined more than anticipated, the inherent resilience of our business model servicing diverse end markets with expansive value-added processing capabilities and quick-turn orders, as well as increased volume, helped mitigate the impact of lower pricing levels,” commented President and CEO Karla Lewis in a statement released with the Q3 earnings report on Thursday, Oct. 24.

“Despite the difficult pricing environment,” SVP and CFO Arthur Ajemyan said on a conference call that same day, “our tons sold surpassed our expectations, leading us to outperform industry shipment levels once again across nearly all products.”

The service center group’s Q3 carbon steel shipments of 1,246,900 short tons (st) grew 8.4% over the year-ago quarter, accounting for 82% of total tons sold across all product lines.

Looking ahead

Following Q3’s strong shipment growth, Reliance expects a modest 6-8% decline in total Q4 shipments due to normal seasonality and temporary macroeconomic headwinds.

Reliance’s leadership cited the upcoming US presidential election as a significant factor contributing to near-term uncertainty among customers.

With the precarious state of the nation’s affairs, the company anticipates further demand weakening across its various end-use markets this quarter. Additionally, it forecasts continued pressure on carbon steel prices to drive a 1.5% to 3.5% sequential decline in average Q4 selling prices.

Lewis mentioned that some customers are planning extended shutdowns for the end-of-year holiday season, contributing to Reliance’s cautious outlook for Q4.

The executive said that once the election is over and we move into the new year, manufacturing activity and demand, bolstered by lower interest rates, will recover as 2025 progresses. Strong tailwinds from unspent dollars from various government initiatives will set the industry up well for 2025, she added.

Lewis told analysts on the call that, regardless of who is elected as the new commander-in-chief, “We’re confident long-term because either administration seems to be supporting manufacturing and trade policy.”

On Thursday, SSAB Americas said it was increasing plate prices by at least $60/st, according to a letter to customers. While SSAB didn’t specify their base prices, it’s their first price increase in nearly a year.

Here’s the latest

SMU’s plate price currently stands at $910/st on average based on our Tuesday, Oct. 23, check of the market (see Figure 1, left-side chart). While some very small spot orders have been reported higher, plate transactions have been in the mid-to-low $800s.

What might be more significant is that smaller volumes are drawing competition amongst mills and sellers. And $1,000/st is far from a competitive number. According to sources, tags have easily been transacting roughly $200/st below Nucor’s published plate price, even for product from the Charlotte, N.C.-based steelmaker itself.

By comparison, our HR price is $685/st. HR tags, while up from July’s lows, are down $360/st since reaching a recent high of $1,045/st at the start of the year.

And even though plate prices have seen fewer volatile swings vs. HR, plate tags have been largely trending down since peaking more than two years ago, especially of late (see Figure 1, right-side chart). Now, they’re at their lowest level since nearly December 2020.

Market reaction

The general sentiment among domestic buyers is that mills are trying to stop the bleeding and set a floor. Some speculate that the move might also help Nucor hold its pricing again when it opens its December order book in a week or so.

“I would have no idea why they would be attempting this increase now,” said a large OEM executive. “Unless they are trying to push Nucor to get their pricing up as well.”

“With Nucor selling well below their published price and having lost their pricing management, it’s like the Wild West,” another source said.

Others note that prices declined even as SSAB took a month-long planned outage at its Montpelier, Iowa, mill in September. Many wonder what might be pushing prices up, especially with distribution centers hurting for demand.

“I don’t see us having any success with customers running it back and letting them know prices are going up,” a plate buyer told SMU. “It’s hard right now to get projects started and off the ground.”

More familiar spreads

The average spread, or premium, plate had over HR between 2017-20 was $132/st. Volatility took hold in the aftermath of Covid-19, and the spread was all over the place. It reached as high as $970/st in the summer of 2022, but currently sits at almost a three-year low of $225 per ton – closer to a more historical level (see Figure 2, left-side chart).

On a percentage basis, plate’s premium over HRC ballooned to 126% in late September 2023 (Figure 2, right-side chart), reaching a 10-month high. It was also not far from the all-time high of 152% in November 2022. However, with HR prices near recent lows and plate tags declining, the premium is down to just 33%, one of the lowest in recent years.

What’s currently at play

The US plate market has been largely quiet, with demand trending down. The trickle, or even lack thereof, of infrastructure spending and the cancellation of wind farm projects have really cut back on demand for much of the year. Some projects are coming online, and greater demand could be on the horizon. For example, there have been recent reports of plate sales for rebuilding the collapsed Francis Scott Key Bridge in Baltimore.

Also, keep an eye on discrete plate lead times. They have been averaging four weeks, but in many cases, sources note that a three- or even two-week turnaround is possible.

What to watch for

The market is working to find the bottom, and SSAB’s recent pricing notice could indicate a bottom is in sight. The timing, in some ways, makes sense. There’s only about five-to-seven weeks’ worth of business left in 2024. So, there might not be enough time to really gauge if the increase takes hold or has legs.

But also keep an eye on service center inventories. Plate inventories were a bit bloated in July, but they have mostly been worked off through September’s report. We’ve seen shipping days of supply come down steadily, coinciding with daily shipping rates creeping up and material on order leveling off. It might not take much of a demand boost to push prices back up.

We’ll be closely monitoring October’s report due next month. Our flash report should be out in the first week of November, and the final report will be available to SMU premium subscribers on Nov. 15.

Editor’s note: If you’d like to become a data provider for our service center inventory report, please contact David Schollaert at david.schollaert@crugroup.com. If you would like to upgrade your executive account to premium, please contact Luis Corona at luis.corona@crugroup.com.

Editor’s note: If you’d like to become a data provider for our service center inventory report, please contact David Schollaert at david.schollaert@crugroup.com. If you would like to upgrade your executive account to premium, please contact Luis Corona at luis.corona@crugroup.com.

Across 2024, global steel output has averaged 154.5 million mt per month. This is 2% or 2.9 million mt lower than the first nine months of last year. September production was 5% below last year.

On a three-month moving average (3MMA) basis, world production in September declined 4% month on month (m/m) to 146.7 million mt in September, the lowest rate in eight months.

September’s production of 151.8 million mt on a 12-month moving average (12MMA) basis (Figure 1) was just 1% lower than September 2023’s 153.6 million mt.

On a daily basis, September production averaged 4.79 million mt (Figure 2). This is 3% higher than the August daily rate of 4.67 million mt. August’s rate was the lowest measure recorded since December 2023. Daily production in September was 5% lower y/y.

Regional breakdown

China, the world’s top steel producer, produced 77.1 million mt of crude steel last month (Figure 3). This is down 1% m/m and 6% y/y. Note that earlier this year, Chinese production climbed to a 14-month high of 92.9 million mt in May. Year-to-date, production has averaged 85.0 million mt per month, down from a rate of 88.0 million mt in the same time frame last year.

Chinese production accounted for 54% of the world’s total steel output in September. This is in line with August and the same month last year.

Steel output from the rest of the world (ROW) remained flat from August to September. Production in these regions totaled 66.5 million mt, down 3% from levels one year prior. ROW production has averaged 69.5 million mt per month so far this year, a slight rise from 69.4 million mt last year.

Production by country

Looking at production levels by country, Indian mills retained the number two spot last month, producing 11.7 million mt of steel in September. Next up was the United States at 6.7 million mt, followed by Japan at 6.6 million mt, Russia at an estimated 5.6 million mt, and South Korea at 5.5 million mt.

US CR coil prices averaged $925 per short ton (st) in our check of the market on Tuesday, Oct. 23, $15/st lower vs. the prior week. Despite a quick snapback after reaching a recent bottom in late July, recent declines place US tags just $25/st away from the market’s lowest level year to date. Prices are now roughly $400/st from a high of $1,325/st in January.

Domestic CR prices are, theoretically, 19% more expensive than imports. That’s down from 21% last week and still well removed from a 31.5% spread in early January.

In dollar-per-ton terms, US CR is now, on average, $142/st more expensive than offshore products (see Figure 1). That’s down $18/st from last week but is still well below a recent peak of $311/st in mid-January.

The charts below compare CR coil prices in the US, Germany, Italy, South Korea, and Japan. The left-hand side shows prices over the last two years. The right-hand side zooms in to highlight more recent trends.

Methodology

This is how SMU calculates the theoretical spread between domestic CR prices (FOB domestic mills) and foreign CR prices (delivered to US ports): We compare SMU’s US CR weekly index to the CRU CR weekly indices for Germany, Italy, and East Asia (Japan and South Korea). This is only a theoretical calculation. Import costs can vary greatly, influencing 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 CR price. Buyers should use our $90/st figure as a benchmark and adjust up or down based on their own shipping and handling costs. (Editor’s note: If you import steel and want to share your thoughts on these costs, please get in touch with the author at david@steelmarketupdate.com.)

East Asian CR coil

As of Thursday, Oct. 24, the CRU Asian CR price was $544/st, unchanged w/w but ~$45/st higher than a month ago. Adding a 71% antidumping duty (Japan, theoretical) and $90/st in estimated import costs, the delivered price to the US is $1,021/st. The theoretical price of South Korean CR exports to the US is $634/st.

As noted above, the latest SMU CR price is $925/st on average, which puts US-produced CR theoretically $96/st below CR product imported from Japan but $291/st above CR imported from South Korea.

Italian CR coil

Italian CR prices were $646/st, flat this week. After adding import costs, the price of Italian CR delivered to the US is, in theory, $736/st.

That means domestic CR is theoretically $189/st more expensive than CR coil imported from Italy. The spread is down $15/st from last week and still nearly ~$270/st below a recent high of $453/st mid-December.

German CR coil

CRU’s German CR price was up $13/st vs. the previous week. After adding import costs, the delivered price of German CR is, in theory, $740/st.

The result: Domestic CR is theoretically $185/st more expensive than CR imported from Germany. The spread is $28/st lower w/w but still well below a recent high of $428/st in the first week of 2024.

Notes: We reference domestic prices as FOB the producing mill, while foreign prices are CIF the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight from either a domestic mill or a port is important to keep in mind when deciding where to source from. It’s also important to factor in lead times. In most market cycles, domestic steel will deliver more quickly than foreign steel. Note also that, effective Jan. 1, 2022, the blanket 25% Section 232 tariff was removed from most imports from the European Union. It was replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. A similar TRQ with Japan went into effect on April 1, 2022. South Korea is subject to a hard quota rather than a tariff.

The projection excludes any impact from the planned acquisition of a casting and hot rolling mill in Shandong province, eastern China, from long-term partner, the Shandong Innovation Group. Closure is anticipated to occur soon. As for market challenges, President and CEO Jorgen Rosengren said: “We aim to continue to offset price pressure and wage inflation with cost reduction and productivity improvement, but expect currency exchange rates to be unfavorable compared to the fourth quarter last year.”

Looking back on Q3, he commented: “We saw good demand in HVAC [heating, ventilation and air conditioning], specialty packaging, and other niche markets, which last year were affected by excess inventory. On the other hand, demand from automotive customers weakened noticeably after the [Northern Hemisphere] summer.”

Overall, shipments were 122,700 mt – an increase of 6.7% compared to last year’s Q3. Sales revenue was 3.1% higher at SEK5.75 billion ($545 million) but net profit fell 14.4% to SEK285 million. Among other achievements, Rosengren highlighted its record-high recycling – the share of sourced recycled aluminum increased to 47.4% in Q3 from 44.4% observed last year.

Strong upstream results for Hydro in Q3 partly offset by weak downstream business

Norsk Hydro released its Q3’24 results. The Norwegian producer posted an adjusted EBITDA of NOK7.367 billion ($673 million), up 88% year over year (y/y) and up 26% quarter over quarter (q/q). As for the unadjusted EBITDA, it came in lower at NOK5.934 billion amid impairment charges of NOK581 million for Hydro Energy and a total of NOK913 million in unrealized losses related to LME contracts for the group.  The adjusted EBITDA was positively impacted by higher aluminum and alumina prices, lower raw material costs, and positive currency effects. This was partly offset by lower recycling margins, extrusions volumes, and energy prices.

The adjusted EBITDA for its primary metal division was at NOK3.234 billion – up 134% y/y and up 28% q/q. Results were driven by higher all-in metal prices and reduced carbon costs, partly offset by higher alumina costs, and inflation on fixed cost.

Primary production was 511,000 mt, up from 507,000 mt in the previous quarter; while sales of 531,000 mt were lower by 53,000 mt from Q2. The all-in price, including the premium, was up $109/mt from the last quarter at $2,851/mt and up $273/mt from last year. The implied all-in primary cost was itself down $100/mt from last quarter at $2,200/mt and stable from last year.

Hydro said that for Q4 it expected higher raw material costs and seasonally higher fixed costs. It also said it had around 71% of its primary production for Q4 priced at $2,445/mt and 42% of premiums booked at $507/mt. 

Hydro’s results for its extrusions segment continued to be lower both y/y and q/q. The adjusted EBITDA of NOK879 billion was down 33% y/y and down 34% q/q. Hydro also said its results were down on lower sales volumes, lower recycling margins, and higher costs, partly offset by higher sales margins and strict cost measures.

As for its end-use markets, sales in automotive were down 14% y/y and sales to transport were down as much as 24% y/y. Meanwhile, sales to building and construction (32% of total sales) recovered to a 2% y/y growth. As for its outlook for Q4, Hydro pointed to higher sales margins offset by lower sales volumes and recycling margins, higher variable costs, and continued soft extrusions markets.

The adjusted EBITDA for Hydro’s Metal Markets segment – which includes the recycling activities – came in at NOK277 million, down 51% y/y and down 10% q/q. Meanwhile, recycling production was down 32,000 mt q/q to 170,000 mt amid a drop of 52,000 mt in sales. The company expects lower volumes and continued margin pressure for recyclers in the current quarter.

Commenting on the results, President and CEO, Eivind Kallevik said: “The positive development in our upstream revenue drivers continued in the third quarter, supporting strong results in our upstream business, countering the overall effects of the challenging downstream market.”

He added: “The downstream aluminum market continued to be challenged by weak demand and recycling margins in Europe and North America.”

He also noted that automotive extrusion demand remains weak due to low electrical vehicle sales in Europe, especially in Germany.

“Building and construction, and industrial demand continues to be moderate with potential 2025 support from lower interest rates. Low activity in these markets limits aluminium scrap supply, squeezing recycling margins and reducing remelt production in both Hydro Extrusions and Metal Markets,” he concluded.

Editor’s note: This article was first published by CRU. To learn more about CRU’s services, click here.

US counts

Through Oct. 25, there were 585 drilling rigs operating in the US, in line with the prior weekly count. The number of oil rigs fell by two week over week (w/w) to 480, gas rigs rose by two to 101, and miscellaneous rigs were unchanged at four.

There were 40 fewer active US rigs last week compared to the same week one year prior, with 24 fewer oil rigs and 16 fewer gas rigs.

Canadian counts

There were 216 active Canadian drilling rigs as of last week, one less than the prior week. Oil rigs fell by three w/w to 150, gas rigs rose by two to 66, and miscellaneous rigs were unchanged at zero.

There are currently 20 more Canadian rigs in operation than levels one year ago, with 28 more oil rigs and eight fewer gas rigs.

International rig count

The international rig count is a monthly figure updated at the beginning of each month. The total number of active rigs for the month of September rose to 947, up 16 from the August count and seven more than levels one year prior.

The Baker Hughes rig count is important to the steel industry because it is a leading indicator of demand for oil country tubular goods (OCTG), a key end market for steel sheet. A rotary rig rotates the drill pipe from the surface to either drill a new well or sidetrack an existing one. For a history of the US and Canadian rig counts, visit the rig count page on our website.

Key takeaways

SMU’s Current Sentiment Index suggests buyers are still optimistic about their businesses’ ability to succeed in today’s market, though their confidence has significantly declined compared to recent months. In contrast, our Future Sentiment Index indicates buyers are optimistic about favorable business conditions in the new year.

Current Sentiment

SMU’s Current Buyers’ Sentiment Index declined nine points to +30 this week (Figure 1). This marks the lowest level recorded since May 2020, surpassing the lows we saw earlier this year in July (+34). This time last year Current Sentiment was significantly stronger at +64.

Year to date (YTD), Current Sentiment has averaged +50 over the first 10 months of 2024. This is considerably lower than the same time frame of 2023 when it had averaged +67.

Future Sentiment

SMU’s Future Buyers’ Sentiment Index rose one point to +71 this week, the second-highest reading this year (Figure 2). Recall that in early August, Future Sentiment dipped to +55, its lowest level in over a year, before quickly recovering to a nine-month high of +72 just two weeks later.

Since the beginning of this year, Future Sentiment has averaged +65. This is down two points from the same period last year. This time one year ago, Future Sentiment stood at +74.

What SMU survey respondents had to say:

“When the election is in the rearview mirror, we believe most industries will return to business as normal in 2025.”

“We have new products in the pipeline that will be fully launched by year-end.”

“Falling interest rates and rising steel prices should help our industry improve.”

“The election will open up more work.”

“We are working to position ourselves for the future.”

“Restrictions on trade, specifically on CORE, will make 2025 a more challenging year for imports.”

Moving averages

When analyzed as a three-month moving average, Steel Buyers’ Sentiment also moved in alternate directions this week, as shown in Figure 3.

As of Oct. 23, the Current Sentiment 3MMA eased to +40.32, just above the four-year low of +39.20 recorded in mid-September. Over the past nine months, the Current Buyers’ Sentiment 3MMA has generally trended downward. The Future Sentiment 3MMA rose to a five-month high of +66.15 this week, recovering from the one-year low observed in early September.

About the SMU Steel Buyers’ Sentiment Index

The SMU Steel Buyers Sentiment Index measures the attitude of buyers and sellers of flat-rolled steel products in North America. It is a proprietary product developed by Steel Market Update for the North American steel industry. Tracking steel buyers’ sentiment is helpful in predicting their future behavior. A link to our methodology is here. If you would like to participate in our survey, please contact us at info@steelmarketupdate.com.

We discuss the climate policy implications of the election in a separate Insight, “Harris or Trump: What does it mean for US climate policies?“

Competing visions for America’s economic future

Below, we summarize Trump and Harris’s agendas, which are likely to have direct implications for the commodity markets.

The economic impact of Trump’s 2024 proposals

Trump’s proposed policies are likely to be highly inflationary. However, lower taxes and deregulation can support growth in the short run.

Trump’s proposal for mass deportations could substantially shrink the workforce, challenging businesses’ ability to meet current demand levels. Research from the Peterson Institute for International Economics suggests that deportation of even 7.5 million undocumented workers – less than Trump’s proposal – would drive inflation higher and reduce GDP. Combined with large tariff increases, a reduced labor force could reinvigorate inflation, making planned interest rate cuts less probable.

Trump’s proposed universal tariff aims to protect American companies from foreign competition by making US-produced goods more affordable relative to imports, while also increasing government revenue. However, a recent Goldman Sachs report underscores the inflationary risks tied to Trump’s tariff plan, estimating that a one percentage point increase in tariff rates could raise core inflation by 0.1 percentage points. Similarly, a study from the US International Trade Commission found that Trump’s 2018 tariffs on Chinese goods led to a 0.2% rise in domestic prices. While businesses previously absorbed many of these costs, the broader tariffs now proposed could place a heavier burden on consumers.

The universal tariff proposal is also likely to provoke retaliatory measures from other nations as they seek to protect their own economies. Such responses could intensify global economic strains, as seen with China’s actions during Trump’s first term. Our scenario analysis suggests that a multilateral trade war could reduce global GDP by approximately 2.5% and decrease industrial production by 4% (Figure 1).

Such a sweeping tariff could lead to a stronger US dollar if trading partners respond with more lenient monetary policies to offset weaker exports. A stronger dollar could, in turn, diminish some of the intended price increases on imports, reduce US export competitiveness, and put downward pressure on commodity prices.

However, Trump’s plan to extend the 2017 Tax Cuts and Jobs Act would maintain the corporate tax rate at 21% (down from the previous 35%) and continue to lower personal income tax rates. This continuation would spur US investment, raise wages, and increase disposable income.

The economic impact of Harris’s 2024 proposals

Kamala Harris’s agenda might translate into economic growth headwinds in the short run but lead to more sustainable growth in the medium to long term.

While Harris’s proposed policies are expected to be less inflationary than Trump’s proposals, some of them can still contribute to upward price pressures. The increase in disposable income for many Americans could spur demand and push prices higher. However, Goldman Sachs contends that these inflationary impacts would likely be tempered by Harris’s other policy measures.

To increase government revenue, Harris proposes raising corporate and individual tax rates, particularly targeting high-income earners. Her plan includes raising the federal corporate tax rate from 21% to 28% and increasing the federal income tax rate for individuals earning over $400 K from 37% to 39.6%. Higher corporate taxes and increased capital gains taxes may reduce investment in capital markets and elevate corporate costs.

Harris is also likely to advocate for more stringent regulations on corporations, which could further increase operating costs, slow performance, and decrease profit margins. Goldman Sachs analysts estimate that these measures would reduce S&P 500 earnings by approximately 5%, with additional tax burdens potentially leading to further economic headwinds.

To support small businesses and families, Harris proposes a series of tax breaks, including up to $50,000 in relief for small businesses, an expansion of the child tax credit to $6,000 for the first year, and a $25,000 tax credit for first-time homebuyers.

Kamala Harris’s trade policy is expected to align closely with the Biden administration’s approach, focusing on multilateral cooperation and fair trade while encouraging domestic production through tax incentives. Her agenda will support a transition to green energy, building on the foundations of the Inflation Reduction Act (IRA). Since its implementation under Biden, the IRA has driven over $250 billion in investments into US energy projects and has contributed to the creation of over 100,000 jobs in the energy sector. However, it is also the most expensive energy policy in US history, raising concerns about long-term fiscal impacts.

Overall, however, the analysis suggests that Harris’s economic policies could result in a modest GDP growth boost between 2025–2026, with a limited effect on inflation. Nevertheless, the precise impact of her policies remains uncertain, as the magnitude of these effects can vary.

How would Trump and Harris shape the nation’s budget?

In 2023, the US recorded a fiscal deficit of 8% of GDP; similar figures are expected for this year. This level of deficit is unusually high, particularly given the current state of full employment. Both the International Monetary Fund (IMF) and key government officials in Washington have voiced serious concerns about the rapidly growing deficit, urging policymakers to take swift action.

As the 2024 election approaches, the fiscal impact of the candidates’ economic proposals has become a central issue. Trump and Harris offer distinct approaches, each with significant implications for the national budget. According to projections from the Tax Foundation, a Trump presidency could lead to a net worsening of the federal deficit over the next decade. Harris’s policies would also have substantial effects on the budget due to her proposed tax increases and spending initiatives. The effects of each candidate’s policies are outlined below (Figure 2).

It is important to emphasize that if the Senate and House of Representatives end up being split between Democrats and Republicans, pushing through further fiscal stimulus could be a challenge, raising the risk of a recession in 2025.

In conclusion, the two candidates’ policies present very distinct potential economic implications. Trump’s tax cuts and supply-side policies might spur high inflation growth, increasing the likelihood of interest rates getting pushed higher. Harris’s proposed policies, including higher taxes and more regulation, could lead to slower economic growth, mild inflation pressures, and a modest decline in interest rates in the short term. However, her focus on green initiatives and infrastructure spending could boost growth in the coming years. At this point, the presidential race remains too close to call, with uncertainty around the outcome of the election weighing on growth in Q4.

With additional contribution from Maria Garcia, economist.

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 SEK (~US$45.2 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.

Editor’s note: This story has been updated to state the correct cost of the Montpelier maintenance outage as 450 million SEK, not €450 million.

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 implemented 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 are signatories of 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 Mexico disputes.

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 Mexico’s steel trade group Canacero, published at the end of August, click here.

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