It did not specify to what level this brings its base prices but noted its right to re-quote previous but unconfirmed orders.

“We will continue to monitor the marketplace and will respond accordingly with competitively priced product,” the company said in a letter to customers.

Sheet prices moving higher

Dofasco’s move follows other steelmakers also hoping to push prices higher in the new year.

On Monday, Feb. 3, Nucor raised its weekly spot price for HR to $775/st. That represents a $25/st rise since the first week of January.

On Jan. 31, U.S. Steel moved up $50/short ton on sheet products, targeting $800/st on HR coil.

The last time Cleveland-Cliffs published its monthly spot HR price was in December, when it said it would target a HR base price of $800/st.

SMU’s weekly check of the market showed current HR spot prices at $690-760/st, with an average of $725/st.

You can check out SMU’s Steel Mill Price Announcement Calendar to follow announced pricing moves.

Recall that USS and Nippon filed two lawsuits after former President Joe Biden blocked the companies’ merger. Biden’s move came after a Committee on Foreign Investment in the United States (CFIUS) review highlighting the deal’s alleged threat to national security.

This week, U.S. Steel and Nippon Steel filed opening briefs in the first lawsuit against the US government.

The second lawsuit targets Cliffs, Goncalves, and McCall, claiming they illegally coordinated to undermine the USS/Nippon deal. This is the suit Cliffs and USW are seeking to have dismissed.

USS and Nippon allege that, by speaking out strongly against the merger, Goncalves and McCall and the USW, by extension, violated federal antitrust laws and Pennsylvania tort laws.

However, the union sees this differently: The suit is “a frivolous and unsubstantiated attack on our union simply for exercising our First Amendment rights,” it said on Wednesday.

In their suit brief, Cliffs and Goncalves also call for the case’s dismissal on First Amendment grounds. They also say the lawsuit lacks any direct evidence of a conspiracy between the Cleveland-based steelmaker and Pittsburgh-based union, as has been alleged by USS and Nippon.

“It is both our right and our responsibility to speak out against the kinds of mergers that U.S. Steel and Nippon were proposing – a sale that would have hurt both our members and our national security. This includes lobbying our elected officials at all level of government and is a fundamental protection for all Americans,” USW added.

As he was interviewed on stage by SMU Editor-in-Chief Michael Cowden on Monday afternoon, word went out that Canada would get a 30-day reprieve from 25% tariffs on exports to the US, as Mexico did earlier on Monday. This came after reaching an agreement to combat fentanyl at the border.

Even in today’s world of 24-hour news access, smartphones, and X, you can still get scooped if you take your eyes off a screen even for a few minutes. Fortunately, Brightbill is good at thinking on his feet – and he adapted to the news in real time.

In a panel moderated by Ethan Bernard, steel trader Murat Askin, founder and CEO of StaalX, joked that there’s only one social media he’s following religiously these days: Truth Social.

Though these current Final Thoughts may be a bit rough (the conference ended mere minutes ago), Donald Trump’s tariffs were definitely the dominant theme. Were they a feature of the new administration rather than a bug? Were they early bluster just to address the border? A clever ploy ahead of USMCA negotiations? All opinions were on display.

By the end of the second day on Tuesday, conference participants were suffering from “tariff fatigue.”

Gary Stein of Triple-S, Marc Lerman of Steel Warehouse, and Alliance Steel’s Drew Gross were asked about their collective wisdom in the face of the current chaos. Perhaps it could be boiled down to three words: “Drink, pray, and buy.”

Sage advice, indeed.

They did this all while chomping on cigars that Gary had brought in. Unlit, of course. Florida fire laws were respected.

New mood

With Trump dominating the conversation, one thing that receded into the background was… 2024. Last year’s rather lackluster demand had faded in place of the dynamism of the current moment. The thing is, it’s still hard to say whether the moment is bearish or bullish – whether tariffs (or the threat of them) will on balance help or hurt steel.

Chaos has a way of concentrating you on the current moment, and one thing: survival.

But as Worthington Steel President and CEO Geoff Gilmore pointed out in his fireside chat with SMU Senior Analyst David Schollaert, the steel industry has faced every kind of calamity in the last few years, and come out the other side, just fine.

Of course, these are just a few quick anecdotes that spring to mind. Stay tuned for more coverage of the event in the next few issues.

See you in Tampa in 2026!

It was such a pleasure seeing the nearly 600 attendees at the conference. We got to talk to so many people on the sidelines, and meet so many of our great readers. We can’t wait to see you next year from Feb. 11-13, 2026, in Tampa again. And… before that we will see you in Aug. 25-27 in Atlanta for Steel Summit!

Whether it’s dynamic pricing, a new administration, new capacity, or ongoing trade cases, this promises to be quite an exciting year for steel!

Cold-rolled prices rose to $910/st, tied with early January for a three-month high.

Our galvanized index jumped to $875/st, now back to levels last seen in early December. Galvalume prices also gained traction, rising to a 14-week high of $905/st.

Plate prices increased for the second week in a row, reaching a near-four-month high of $910/st this week.

SMU’s price momentum indicator is now at higher for all sheet and plate products, following last week’s adjustment to higher for hot-rolled coil and plate.

Refer to Table 1 for the latest SMU steel price indices and how prices have trended in recent weeks.

Hot-rolled coil

The SMU price range is $690-760/st, averaging $725/st FOB mill, east of the Rockies. The lower end of our range is up $10/st w/w, while the top end is up $40/st w/w. Our overall average is up $25/st w/w. Our price momentum indicator for hot-rolled steel remains at higher, meaning we expect prices to increase over the next 30 days.

Hot rolled lead times range from 4-6 weeks, averaging 5.0 weeks as of our Jan. 22 market survey. We will publish updated lead times in our Thursday issue.

Cold-rolled coil

The SMU price range is $870–950/st, averaging $910/st FOB mill, east of the Rockies. The lower end of our range is up $30/st w/w, while the top end is unchanged. Our overall average is up $15/st w/w. Our price momentum indicator for cold-rolled steel has been adjusted to higher, meaning we expect prices to increase over the next 30 days.

Cold rolled lead times range from 4-8 weeks, averaging 6.6 weeks through our latest survey.

Galvanized coil

The SMU price range is $840–910/st, averaging $875/st FOB mill, east of the Rockies. The lower end of our range is up $20/st w/w, while the top end is up $30/st w/w. Our overall average is up $25/st w/w. Our price momentum indicator for galvanized steel has been adjusted to higher, meaning we expect prices to increase over the next 30 days.

Galvanized .060” G90 benchmark: SMU price range is $937–1,007/st, averaging $972/st FOB mill, east of the Rockies.

Galvanized lead times range from 4-8 weeks, averaging 6.4 weeks through our latest survey.

Galvalume coil

The SMU price range is $840–970/st, averaging $905/st FOB mill, east of the Rockies. The lower end of our range is up $10/st w/w, while the top end is up $60/st w/w. Our overall average is up $35/st w/w. Our price momentum indicator for Galvalume steel has been adjusted to higher, meaning we expect prices to increase over the next 30 days.

Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,134–1,264/st, averaging $1,199/st FOB mill, east of the Rockies.

Galvalume lead times range from 4-8 weeks, averaging 6.5 weeks through our latest survey.

Plate

The SMU price range is $850–970/st, averaging $910/st FOB mill. The lower end of our range is down $10/st w/w, while the top end is up $30/st w/w. Our overall average is up $10/st w/w. Our price momentum indicator for plate remains at higher, meaning we expect prices to increase over the next 30 days.

Plate lead times range from 2-6 weeks, averaging 4.5 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.

Nucor said the increase was effective with orders confirmed as of Feb. 4.

The latest increase comes after Nucor raised its plate prices on Jan. 27, by $60/st with the opening of its March order book.

No clarity on the base price for as-rolled and cut-to-length products was given, but in theory, the increase brings its base to $1,075/st. The target base prices for normalized, quench and tempered, are $1,275/st and $2,445/st, respectively.

SMU’s plate price stands at $910/st on average, up $10/st from a week ago. Our HR price is at $725/st on average, up $25/st from a week earlier, according to SMU’s interactive pricing tool, which you can find here.

Also, you can track mill price announcements here.

Commerce assigned that company, Nova Steel, and a handful of Vietnamese companies higher initial subsidy rates “based on facts available with adverse inferences,” it said in a fact sheet on Tuesday. Basically, these smaller companies were penalized with higher rates for failing to respond to Commerce’s initial questionnaires, veteran international trade attorney Lewis Leibowitz told SMU.

US Customs and Borders Protection (CBP) will immediately begin collecting CVDs on coated steel imports at the rates shown in the table below.

Exporter/producer	Preliminary subsidy rates
* indicates rate based on facts available with adverse inferences.
Brazil
CSN Usiminas/Ternium Brasil All others	1.72% 0.33% de minimis 1.72%
Canada
ArcelorMittal group, including Dofasco Stelco Nova Steel All others	1.21% 1.40% 41.40%* 1.22%
Mexico
Ternium Mexico Galvasid All others	1.56% 0% 1.56%
Vietnam
Hao San Group Ton Dong A Corporation 190 Steel Pipe Co. Vietnam Germany Steel JSC Vietnam Steel Pipe Co. Vina One Steel Manufacturing Corporation VNSteel All others	0.13% de minimis 0% 140.05%* 140.05%* 140.05%* 140.05%* 140.05%* 140.05%* 46.73%

Note that de minimis rates are so low that cash deposits aren’t typically required at those rates.

Updated case timeline

Commerce also announced it would appease petitioners’ request to align the final phases of the subsidy and less-than-fair-value/anti-dumping (AD) investigations.

Thus an updated case timeline is shown below. Note that CBP will only collect CVDs over the next two months, with the collection of AD duties starting in early April.

Upcoming CORE trade case events	Current due date
DOC preliminary AD margin	April 3
DOC final AD & CVD margin determination	June 17
ITC final AD & CVD final determination	August 1

CORE import statistics

Commerce also released statistics on CORE imports from the above countries in recent years, which may be of interest to our readers. These figures include galvanized and Galvalume sheet and all coated products covered in these investigations.

Country	2021	2022	2023
Source: US Department of Commerce
Brazil
Volume – short tons Value per short ton	200,959 $1,301	200,991 $1,309	209,729 $926
Canada
Volume – short tons Value per short ton	1,075,834 $1,204	998,198 $1,397	1,025,527 $1,220
Mexico
Volume – short tons Value per short ton	577,556 $1,699	558,791 $1,660	525,366 $1,355
Vietnam
Volume – short tons Value per short ton	605,045 $1,034	638,655 $1,177	266,840 $905

“The addition of Resco Group to the company’s North America operations will significantly increase local-for-local production, improving supply chain security for these critical industries that underpin the economic health of the region,” the company said.

RHI plans to upgrade and increase the capacities of Resco’s 11 plants. Resco, founded in 1946, operates seven plants and two raw material sites in the US, one plant in Canada, and another in the United Kingdom.

“Combining our expertise in refractory solutions with Resco’s strengths in the petrochemical, cement, and aluminum sectors, we aim to broaden our offerings through increased local production and improved supply chain security,” commented Craig Powel, regional president of RHI Magnesita North America.

“We are grateful for Balmoral Funds’ support during their ownership, which helped strengthen our market position, and we look forward to continuing our growth trajectory as part of RHI Magnesita’s global platform,” added Mark Essig, CEO of Resco from 2022 until the sale’s closing.

RHI Magnesita has 67 production sites, 12 recycling facilities, and more than 70 sales offices around the globe.

An Index reading above 50% indicates the manufacturing economy is growing, while a reading below that means it is contracting.

ISM noted that the overall economy continued to expand in January for the 57th consecutive month, emphasizing that a PMI reading above 42.5% generally indicates that the overall economy is growing.

“Demand and production improved; and employment expanded. However, staff reductions continued with many companies, but at weaker rates. Prices growth was moderate, indicating that further growth will put additional pressure on prices,” said ISM Chair Timothy R. Fiore.

He noted that moderating price increases at a slower rate will be a significant challenge for manufacturers this year as demand grows.

Half of the 16 manufacturing industries ISM tracks reported growth in January. The primary metals industry was one of those, while the fabricated metal products sector again reported negative growth.

Executive comments

The report shares select comments from responding companies. An executive in the primary metal sector remarked, “Automotive order demand continues to be consistent and on a steady pace. Beginning to look at hiring additional team members once again. Pricing is holding firm. Having to work overtime to cover plant inefficiency to date.”

Another comment from a fabricated metal products industry head was also optimistic, saying, “Capital equipment sales are starting 2025 off strong. Normally, we see a soft start to the year, so this strong start is unusual.”

At the start of the month, the SMU Price Momentum Indicator was at Neutral for both sheet and plate products. At the end of the month, we adjusted it to Higher for hot-rolled coil and plate.

Following a dismal December, steel scrap prices rebounded in January, with the largest monthly increase in over a year. Busheling and heavy melt scrap (HMS) rebounded $20-25 per gross ton (gt) from December’s four-month low. Shredded scrap prices rose $18/gt in January, recovering from a 14-month low. Buyers have a bullish outlook for February prices, expecting another $20/gt bump.

Our Steel Buyers’ Sentiment Indices indicated continued optimism in the first month of the year. Through Jan. 22, our indices suggested that buyers were slightly less confident in their business’ chances of success than they were at this time last year. Our Future Sentiment Index reflects that buyers maintain a positive outlook for early 2025, slightly better than they felt at the start of 2024.

Buyers are still reporting short lead times on spot mill orders, although our latest survey shows that production times have marginally extended for HR, cold-rolled, and plate products. Lead times for coated products inched lower through the end of January to some of the shortest levels in months. Sheet and plate production times have been historically low since last May and July, respectively.

The majority of steel buyers continue to report that mills are negotiable on new spot order prices, though they’re not as willing as they were at the start of the month. Mill negotiation rates had been high throughout much of 2024 but were especially so in the back half of the year.

See the table below for other key January metrics (click to expand). Historical monthly review tables can be found on our website.

Timothy Brightbill, partner and co-chair of international trade practice at Wiley Rein LLP, spoke at Steel Market Update’s Tampa Steel Conference Monday afternoon to discuss what the changing trade and tariff landscape means for the steel market.

During a very turbulent Monday, Mexico and Canada both reached agreements with the United States to stave off a 25% blanket tariff on goods for 30 days after they said they would address border issues. Both countries had said they would retaliate with their own tariffs on US goods.

Now, attention turns to China, where an additional 10% levy looms over goods. Beijing, in turn, slapped tariffs on US products.

The threat of tariffs sent US stocks into a nosedive Monday morning. Though Wall Street pared back its losses after the announcements, it was clear the market didn’t react well to the heavy-handed trade restrictions. Stocks were still bruised on Tuesday.

Tariff assessment

While some observers have said the threat of tariffs is a negotiating ploy or a way of revisiting USMCA, Brightbill said it’s more than that.

“Tariffs are a centerpiece of President Trump’s economic plan,” Brightbill told the Tampa audience. “Part of it is the revenue associated with the tariffs, and if you put a large tariff on the entire world, you can raise a lot of money for funding tax cuts or reducing the deficit, or whatever you want to do.

“That being said, President Trump is also extremely attuned to the stock market,” Brightbill said. “He does not want to wreck the economy. He does not want to take down the stock market, and so I think there was an element of that going on, and he chose to take that off-ramp.”

While Trump may see tariffs as a way to promote re-shoring and economic stability, tariffs are also a way to obtain reciprocity or exact revenge, Brightbill said.

“(Trump) feels like the rest of the world is ripping off the United States, and that is why those actions apply not just to our foes, not just to countries like China, but also to our neighbors to the north and south, so that that is driving a lot of this,” he noted.

Though a 30-day pause is in effect, tariffs are still on the table – and steel and aluminum are included.

Steel and aluminum are a focus for the next four years

In examining the administration’s America First trade policy, 10 sectors have been identified as high priorities, with steel and aluminum ranking on the list.

“You all, for better or worse, are the focus of this administration for the next four years, as was true during Trump 1.0,” Brightbill said.

Going forward, he said it’s important to keep in mind that the mood in Washington now is “one of radical change.”

“This administration comes in more prepared than it was eight years ago to try to change some things, regardless of what you think of that, and it’s true for trade policy as well,” Brightbill said. “And there is going to be an effort to use more of the laws, sometimes in new and different ways, sometimes in very aggressive ways.

“The question will be: What do you first do about that? What does Congress have to say? What do companies and industries have to say? What does the stock market have to say?” Brightbill remarked. “All these things will play but it is going to be a turbulent four years, and the fact that trade is such a high priority puts it on all of us to figure out the best path forward.”

Weekly production was 0.5% higher than the year-to-date average of 1,647,000 st per week. Compared to the same week a year ago, weekly production is 0.8% higher this year. 

Last week’s mill capability utilization rate was 74.4%, slightly above both the previous week (73.7%) and the same week last year (73.9%).

Year-to-date production now totals 7,534,000 st at a capability utilization rate of 74.0%. This is 1.0% higher than the same period of last year when 7,461,000 st had been produced at a capability utilization rate of 73.3%.

Weekly regional production data and week-over-week (w/w) changes are as follows:

• Northeast – 118,000 st (down 5,000 st w/w)
• Great Lakes – 503,000 st (down 2,000 st)
• Midwest – 233,000 st (down 12,000 st)
• South – 745,000 st (up 42,000 st)
• West – 57,000 st (down 8,000 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 graphic included in this report shows unadjusted weekly data. The monthly “AIS 7” report is available by subscription from AISI and can provide a more detailed summary of domestic steel production.

The case, United States Steel Corporation, et al v. Committee on Foreign Investment in the U.S., et al, was filed in the US Court of Appeals for the District of Columbia Circuit. Named respondents include CFIUS, President Donald Trump, Attorney General Merrick Garland, Secretary of the Treasury and CFIUS Chairperson Scott Bessent. Former President Joe Biden and former Federal Reserve Chair Janet Yellen were respondents listed as terminated from the case in January.

The companies said filing the opening brief marked “an important step towards vindicating the Companies’ commitment to the Transaction.”

They confirmed an earlier report that the CFIUS suit continues expeditiously, with parties’ briefings slated for completion by March 17, and oral arguments to begin thereafter.

“The Companies remain steadfast that the Transaction will enhance, not threaten, United States’ national security, protect U. S. Steel workers, revitalize jobs in communities that rely on American steel and make American Steel bigger and better,” they stated.

“Importantly, it would create an American steel champion that is well-positioned to compete against China,” they added.

In fact, the Government of Canada had pushed back, saying it would implement 25% tariffs on $155 billion worth of US products starting at the same time.

“Canada will not stand by as the United States imposes unjustified and unreasonable tariffs on Canadian goods,” the Department of Finance Canada said in a statement on Sunday, Feb. 2.

But just before 5 p.m. ET on Monday, Trump and Canadian Prime Minister Justin Trudeau announced they had talked and both sides would be pausing the tariffs for a 30-day period, so we had to slightly redo this post.

Trudeau said Canada is implementing a $1.3 billion border plan, which includes sending ~10,000 frontline personnel “to stop the flow of fentanyl.”

Pleased with this initial outcome, Trump said tariffs would be “paused for a 30 day period to see whether or not a final Economic deal with Canada can be structured.”

Canada’s initial list of US products to hit with tariffs is long and can be found here. The steel-intensive appliances on the list could be of interest to the SMU community: refrigerators, washing machines, dishwashers, stoves, and ranges.

Canada said steel, aluminum, automobiles, and aerospace products were among the US products that faced tariffs on a second list. Stay tuned for next month’s tariff deadline crunch.

Canadian steel industry displeased

The Canadian Steel Producers Association (CSPA) initially reacted with deep disappointment to Trump’s 25% tariffs on Canadian products. President Catherine Cobden highlighted the “significant disruption and economic hardship” the tariffs would cause for the highly integrated North American steel industry.

Cobden said it’s concerning that Canada’s efforts to safeguard the North American steel market are not being recognized. She pointed out that Canada has demonstrated a willingness to work with the US to tackle unfair trade, from enacting melted and poured requirements to aligning tariffs on Chinese products.

Before late Monday’s deal, CSPA welcomed the Canadian government’s “decisive action through retaliation” and supportive approach to helping the country’s industry.

USW chimes in

The United Steelworkers spoke up on behalf of its many members on both sides of the US/Canada border.

“The USW has long called for systemic reform of our broken trade system, but lashing out at key allies like Canada is not the way forward,” USW International President David McCall said in a statement on Feb. 1.

“The key to eliminating unfair competition, confronting global overcapacity in crucial sectors, and stemming the flow of unfairly traded products making their way into North America is targeted tariffs on countries that violate our trade laws and greater coordination with our trusted allies – not sweeping actions that undermine crucial relationships,” he noted.

Tariffs threaten to destabilize industries on both sides of the border, he said. He called on the president “to reverse course on Canadian tariffs so that we can focus on trade solutions that will serve working families for the long-term.”

“We categorically reject the slander that the White House is making against the Mexican government of having alliances with criminal organizations,” Sheinbaum responded. “If such an alliance exists anywhere, it is in the armories of the United States that sell high-powered weapons to these criminal groups.”

She proposed a working group for the two sides to discuss the issues. “It is not by imposing tariffs that problems are resolved, but by talking and dialoguing,” she added.

Monday’s agreement

The two leaders conversed Monday morning and took to social media shortly thereafter to tout their deal.

Sheinbaum said Mexico agreed to send 10,000 members of its National Guard to the US-Mexico border to prevent drug trafficking. At the same time, the US committed to do its part to stop high-powered weapons trafficking.

“We had a good conversation with President Trump with great respect for our relationship and sovereignty,” Sheinbaum stated on X, formerly Twitter. “Our teams will begin working today on two fronts: security and trade.”

“It was a very friendly conversation,” Trump also said on social media, “We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico.”

He added that he looks forward to participating in the negotiations with Sheinbaum “as we attempt to achieve a “deal” between our two Countries.”

However, the Cleveland-based steelmaker noted that order books are starting to improve in the new year.

The company is “confident that the manufacturing-friendly items on President Trump’s agenda will have an outsized benefit on Cleveland-Cliffs. This includes the recently announced tariffs on Mexico, Canada, and China and the expectation that there is more to come on steel specifically,” Goncalves said Monday morning.

For Q4’24, Cleveland-Cliffs expects to report steel shipments of 3.8 million short tons, revenues of $4.3 billion, and an adjusted EBITDA loss of about $85 million.

In the previous quarter, Cliffs posted a $ 242 million net loss on sales of $4.57 billion.

For the full year, the company expects to report steel shipments of 15.6 million st, revenues of $19.2 billion, and adjusted EBITDA of about $775 million.

Cliffs completed its acquisition of Canadian steelmaker Stelco Holdings on Nov. 1, so the report only includes results from Stelco since then.

The company plans to release its full earnings results after the US market closes on Feb. 24.

Nucor’s joint-venture subsidiary California Steel Industries (CSI) is also up $15/st on HR coil to $835/st, said a letter to customers.

Even with the repeated increases, lead times of 3-5 weeks continue to be offered, the Charlotte, N.C.-based company said.

SMU’s average HR price has also seen little change since November and is presently at $700/st, up $15/st w/w, according to our interactive pricing tool.

We will update our indices this week and publish the prices in Tuesday’s newsletter.

Tariffs. Tariffs. Tariffs. That’s what’s on people’s minds. Things move pretty fast. The sentence you are about to read might’ve been changed 20 times to adapt to the changing news. Well, it looks like tariffs on Mexico, Canada, and China are a go.  By executive order on Saturday, Trump enacted 25% tariffs on Canada (except for Canadian “energy resources,” which are 10%), 25% on Mexico, and 10% on China. They go into effect on Tuesday. Trump had on Friday also floated the possibility of tariffs on the EU.

Buckle up!

All the nuts and bolts, and what that all means for steel… it’s hard to determine concretely. Still, as major trading partners, there’s bound to be a big impact. Think Canadian crude and Mexican auto parts, for example. With so much uncharted territory ahead, and the very real chance Trump could scoop the conference with another big announcement, it might be helpful to take a look back.

Origin story

SMU’s collaboration with Port Tampa Bay started off when SMU founder John Packard served as master or ceremonies for the event in 2019.

The partnership deepened during the Covid years. SMU was fresh off our “virtual” Steel Summit of 2020. The folks in Tampa liked how we virtually conducted ourselves, and thought we would be a good collaboration partner. So in 2021 we teamed up for a “virtual” Tampa Steel Conference.

In 2022, we were back in person. But we were starting to find out that the post-pandemic world was a different place than the pre-pandemic one. While Covid might have been dying down, the war in Ukraine was about to heat up.

None other than Cleveland-Cliffs’ top executive, Lourenco Goncalves, said at the conference that war was coming. He hinted that he had that on good authority from high-ranking sources in DC.

That was not the consensus view. Goncalves made those remarks on Feb. 16, 2022. About a week later, on Feb. 24, Russia launched its full-scale invasion or Ukraine.

Some other hot-button issues included supply chain snarls, chip shortages… And one shortage 2022 did not have was significant issues to speak about.

Kicking off 2025

Hard to believe that was three years ago. While Covid-19 has retreated into the background, the war in Ukraine is still very much with us. In general, while we are no longer “virtual,” the world of 2019 seems very, very far away in every conceivable sense.

And now we have clearly entered a new period: Trump, the Return. Our CRU colleague Josh Spoores shared an excerpt from a book by Marko Papic called Geopolitical Alpha – An Investment Framework for Predicting the Future. It details “Trump’s Seven Steps of Maximum Pressure.” For reference, with the tariffs we are probably on “Step Three: Punch Someone in the Mouth.” A lot of countries might soon be receiving a knuckle sandwich.

Timothy C. Brightbill, Wiley Rein LLP partner and co-chair, International Trade Practice, will be speaking on Monday in Tampa about Trump, trade, tariffs, and their impact on the market. That landscape is changing from day to day – at times from hour to hour – and we’re guessing that presentation will be revised right up until showtime.

On Tuesday, we’ll feature an “Analyst Roundtable: Steel Experts Forecast for 2025… and Beyond!” Bill Peterson, senior analyst of metals and mining and clean tech at JP Morgan, and the previously mentioned Josh Spoores, CRU principal analyst, will try to read the future from their best crystal ball as to what’s in store this year in steel.

As far as beyond 2025? Right now, we are just focusing on having the most up-to-date tariff info for our Sunday newsletter!

Lots more to offer

Of course, those are just two examples. We’ve got Fireside Chats with leading steel executives, panelists up and down the steel supply chain, and plenty of opportunities to buttonhole fellow attendees and get their latest impressions on the market.

We don’t know exactly what will happen by the time the first session kicks off on Monday. But we feel it’s not an exaggeration to say that this is going to be one action-packed conference.

We can’t wait to see all of you there!

PS – Here’s a little secret we’ve been keeping. We take walk-ins. So if you’re reading this now and haven’t registered for Tampa Steel, there is still time. You can register here. You might miss the networking reception on Sunday evening. But you’ll get all of the great conference programming on Monday and Tuesday. A full agenda is here.

And more tariff announcements are expected over the next few weeks. (Trump has also threatened the EU.) This is the continuation of a blizzard of executive actions since Jan. 20.

The benefits from higher tariffs are speculative and unproven. The disruptions caused by tariffs and other trade restrictions are better documented and cannot be rationally denied. For the tariffs to be good policy, the Trump argument must therefore be sure that the benefits to the US exceed the cost of these disruptions. Otherwise, we have madness masquerading as policy.

The tariffs are no longer threats. They are real. And they will affect Americans—both companies and individual consumers. They will be especially hard on manufacturers that vigorously compete globally, because producing in the United States will become more expensive due to increasing cost of parts and raw materials imported into the United States.

All three countries are in the president’s crosshairs because of their perceived shortcomings in helping the US cope with border enforcement and the illicit drug trade. The drug trade, especially fentanyl, costs thousands of US lives every year. Crimes committed by individuals entering the country illegally are responsible for more violence.

In addition, the US runs a trade deficit with Canada and Mexico. The US imports products from those countries that, the president says, we don’t need—like oil and lumber.

But as many are aware, the US, Canada, and Mexico are economically linked in ways that are not easy to break. The auto industry, for example, sends cars, trucks, and components over international borders many times. Changing that will be costly, and it will not significantly reduce the trade deficit.

Energy products, such as natural gas, flow through pipelines that also cross borders. Over the years, this trade has become easier and more advantageous to all parties, on both sides of the US border.

Tariffs will not end this interdependence. Nor is it clear that ending it would be good for the US. But tariffs surely will make it more expensive, especially if tariffs are imposed broadly and without evaluating what sectors they will help or hurt the most.

President Trump reportedly delayed imposing tariffs on his first days in office because of disagreement within the administration about whether they would do more harm than good. Mexico accommodated the US by restoring the “remain in Mexico” requirement for asylum seekers in the US. But that was not enough. What would be enough? We don’t know.

China reveals another dimension. The US and China are economic and geopolitical rivals. China has gained on the US in economic and military strength. In 1990, China’s gross domestic product was an estimated $400 billion, 1/15 the size of the US economy. By 2023, China’s GDP ballooned to $17.9 trillion, 1/3 less than that of the US.

In the military sphere, China has also gained. The Chinese Navy is now larger than the US navy. The People’s Liberation Army has more than 2 million active-duty soldiers, the largest active fighting force in the world. It is double the size of the US Army, Navy, Air Force, and Marines.

Will more tariffs on Chinese imports into the United States change the nature of the rivalry? The answer is not clear. But the best evidence suggests it will not.

Most Chinese exports to the US are already subject to tariffs ranging from 7.5% to 25%. Many products are not available from domestic sources in the United States. Third countries might take up the slack.

China is also implicated in illicit drug trade, cyberattacks, and spying on Americans (through TikTok, for example). Will the tariffs bring China to the bargaining table? There are no signs that they will change China’s behavior.

The customary rent-seekers in the steel and aluminum industries, as well as in solar energy equipment, might be delighted at the news that there will be new tariffs on China. Other industries, such as chip makers (who already have cashed in on subsidies from Uncle Sam), and many others who complain about unfairly traded (“dumped” and subsidized) imports might line up for further assistance. That government aid would come through more protective tariffs or subsidies. (“Dumped” is in quotes because these laws don’t accurately measure the degree of underselling.)

The Trump administration argues that the country will be made safer from the waves of illegal immigration, violent crime, and drugs. It says new industries will make products with American labor that are now made abroad. The degree to which that will actually happen has not seriously been studied. And while we would all benefit from the removal of violent criminals from our midst, most immigrants are not violent criminals (or even nonviolent ones).

If the tariffs were demonstrably likely to affect those problems, more people would support them. But they are quite controversial now because they are not clearly beneficial to most people.

Perhaps the public perceives tariffs as a cure for the worry that the US is in competitive decline. They might think that decline is due to unfair foreign competition. To the contrary, while our rate of growth has slowed, our country is the greatest and most productive on earth. Maybe it is the greatest that ever was.

The feeling that any gains we make must come at the expense of others is a mistake. Trade is a positive game, not a zero-sum game. The many workers in industries that use steel, aluminum, lumber, and other products would agree.

The benefits from higher tariffs are speculative and unproven. The disruptions caused by tariffs and other trade restrictions are better documented and cannot be rationally denied. For the tariffs to be good policy, the Trump argument must therefore be sure that the benefits to the US exceed the cost of these disruptions. Otherwise, we have madness masquerading as policy.

The president is creating a new reality where tariffs are the key to future prosperity. This policy does not have a good track record. But the president thinks it does. The country is entering a new reality, where the president believes economic and geopolitical self-sufficiency is both achievable and beneficial. The old international order is ending, portending more conflict or more non-democratic governments (perhaps both).

But if tariffs are the answer to the trade deficit, why are the tariffs on Canada and Mexico only 25%? Why not 100%, or a total embargo? What would be the economic and geopolitical consequences of cutting off trade altogether? The new order may be headed there.

As of press time, I didn’t have the necessary details regarding the legal and constitutional authority of the president to impose these tariffs without congressional authorization. Once their basis in law is revealed, the lawsuits will start. And some federal judge somewhere will probably block implementation of the tariffs, at least until the merits of the case can be heard. Perhaps the courts will interrupt the progress of this new order. But they cannot reverse it.

The tariffs will go into effect at 12:01 ET on Tuesday, according to an executive order. The White House documents made no mention of exemptions.

Trump said on Thursday that tariffs were imminent.

The fact sheet noted that President Trump said in November – a reference to a post on Truth Social – that the tariffs would apply to “ALL products coming into the United States, and its ridiculous Open Borders.”

Canada and Mexico have vowed to retaliate.

Note that Canada runs a trade surplus with the US, including in steel. But, broadly speaking, the surplus is because the US depends on heavy crude from Canada’s oil sands. Midwest refineries in particular rely on it.

The Trump administration said the tariffs were necessary because of a “national emergency” stemming from “illegal aliens and drugs.” It singled out fentanyl and the chemicals used to make it.

“Tariffs are a powerful, proven source of leverage for protecting the national interest,” the White House said in a statement.

“President Trump is using the tools at hand and taking decisive action that puts Americans’ safety and our national security first,” it added.

The documents mentioned steel only in passing. The fact sheet pointed out that Trump used “national security” to justify tariffs on steel and aluminum. That was a reference to Section 232, which Trump implemented in March 2018.

The measure introduced a 25% tariff on imported steel and a 10% tariff on imported aluminum. Trump came back to the same round numbers in these much broader tariffs.

The price hike was effective immediately and applied equally to hot-rolled, cold-rolled, and coated flat-rolled steel. There was no letter announcing the move as best as SMU can determine.

U.S. Steel’s $50/st price hike appears to be the first since it announced a $30/st increase in October. Its price increase also comes after Nucor announced a modest $10/st price hike on Monday. That move represented Nucor’s first price increase since mid-November, according to SMU’s mill price announcement calendar.

Some context on why the increase amounts differ so much: Nucor, unlike most mills, updates prices once a week. So it tends to increase prices more gradually than mills that announce prices on a monthly basis (Cleveland-Cliffs, for example) or on an irregular basis (most other mills).

SMU has in addition heard that mills that had been offering coated pricing in the low $800s/st have raised price substantially in more recent offers.

The price hikes come on the heels of higher scrap prices in January, expectations that scrap will move higher in February, and anticipation that President Trump’s tariffs could drive both up prices for both steel and raw materials such as scrap and pig iron.

Tariffs by the Trump administration on ferrous scrap would disproportionately impact the flow of scrap, mainly industrial scrap into the US.

SMU spoke to a large Canadian exporter of scrap into US mills. He said they have scrap en route to the US via railcar. They have fixed contracts on most of their shipments.

So far, none of their US buyers have instructed them to halt shipments, although one steel producer has notified the trade they will not buy anything from either potentially tariffed country for February.

Our Canadian source said, “It’s not us who has to pay the tariffs; it’s the US customer.”  

So, they are waiting to see what ensues next week before making any further decisions.

Another source in Canada involved in the iron ore and metallics trade said the last time Trump enacted tariffs, there were exemptions for iron ore and ore-based metallics, pig iron, and DRI.

This time they do not know if there will be exemptions. The Canadian producers will have to be advised of these new tariff details before they assess the implications.

However, he continued, if tariffs are placed on Canadian iron ore, he doesn’t think it will have a serious effect since their exports can be redirected to other countries. Canada does produce a high-purity grade of pig iron called sorelmetal. It is distributed to a degree into the US foundry industry. This same product is also imported from South Africa from the same company.

Our source also volunteered his views on the stated reasons for tariffs by the US administration.

“They cannot be taken seriously,” he said. He said despite the US and Canada sharing a border of over 5,000 miles, most of the fentanyl and massive illegal immigration is coming from Mexico, not from Canada.

The Canadian/US border is one of the busiest and best managed in the world. And Canada, a US ally, has already announced a plan to increase border security, he added.

On the trade deficit, he said the following:

“Trump’s comments regarding trade deficits with Canada are poorly characterized. While it is true that the US has a trade deficit with Canada, if you remove energy (oil/gas/electricity), then there it is actually a surplus for the US (i.e., manufactured goods). Also, many of the US border states are in trade surplus with Canada, so if Canada retaliates, it is these US border states that may be hurt.”

A US Midwest-based scrap executive offered a couple of scenarios when ferrous scrap is subject to tariffs. The tariffs will drive a short-term increase in the demand for prime industrial grades of scrap. This will mainly affect mills in Detroit, the Ohio Valley, Pittsburgh, Northern Indiana, Northern Ohio. If it lasts longer, the tariffs could increase pig iron and DRI use.

Also, he said, in the medium term, the tariffs could increase hot-rolled coil (HRC) purchases. Mills, especially integrated ones, would have no trouble meeting this increase in demand. On tariffs for Mexican scrap, they should drive scrap prices down in Mexico and maybe strengthen prices in Texas.

Another source said an an EAF steel producer has held up scrap from Mexico as they reportedly don’t want to pay the tariffs.

In our market check on Tuesday, Jan. 28, US CR coil prices averaged $895 per short ton (st), down $10/st from the prior week. Prices peaked at $1,325/st a year ago before falling nearly $450/st by summer. They have since fluctuated by roughly $50/st at most.

Domestic CR prices are, theoretically, 16.7% more expensive than imports. That premium is down from 18.2% last week and from 31.5% a year ago. In dollar-per-ton terms, US CR is on average $118/st more expensive than offshore prices (see Figure 1). That’s down $14/st w/w and down from a premium of $311/st a year ago.

The charts below compare CR coil prices in the US, Germany, Italy, South Korea, and Japan. The left side shows prices over the last two years and the right 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, Jan. 30, the CRU Asian CR price was $528/st, down just $1/st w/w but ~$21/st higher than a month ago. Adding a 71% anti-dumping duty (Japan, theoretical) and $90/st in estimated import costs, the delivered price to the US is $993/st. The theoretical price of South Korean CR exports to the US is $618/st.

As noted above, the latest SMU CR price is down $10/st at $895/st on average, placing US-produced CR theoretically $98/st below CR product imported from Japan but $277/st above CR imported from South Korea.

Italian CR coil

Italian CR prices were $660/st, up $10/st this week. After adding import costs, the price of Italian CR delivered to the US is, in theory, $750/st.

That means domestic CR is still theoretically $145/st more expensive than CR coil imported from Italy. The spread is down $20/st vs. last week and ~$303/st below a recent high of $448/st a year ago.

German CR coil

CRU’s German CR price was up $7/st vs. the previous week. After adding import costs, the delivered price of German CR is, in theory, $746/st.

The result: Domestic CR is theoretically $149/st more expensive than CR imported from Germany. The spread is down $17/st w/w and 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.

Tariff uncertainty weighs on US demand

The US demand outlook remains mixed. On the one hand, the Trump administration is promising to focus heavily on reindustrialization efforts, which are positive for zinc demand. On the other hand, the US is a net importer of refined zinc, and 25% tariffs on goods from Canada and Mexico, if realized, could be detrimental to US demand. CRU does not expect a blanket approach to tariffs even if they are implemented. We believe tariffs are likely to affect manufacturing goods that can be produced in the US but should not apply to natural resources, for which there are no import substitutions and no refined supplies immediately available.

However, the market remains cautious. The forward-looking AIA/Deltek Architectural Billings Index (ABI) declined significantly to 44.1 in December from 49.6 in November. The US manufacturing index remained in contractionary territory at 49.3.

US spot zinc prices rise on decline in spot material availability

Market participants noted that some annual contract volumes for 2025 have been concluded, indicating terms were slightly higher than our premia assessment for late 2024 of around 15.50 ¢/lb. The US spot premia is assessed to have risen in January as the threat of tariffs has resulted in consumers buying material at firmer terms. Meanwhile, the unexpected decline in output from Teck has meant there is now reduced material available for the spot market. As a result, we have increased our US Midwest delivered premia to 16.00 ¢/lb for January from 15.25 ¢/lb in December.

This analysis was first published by CRU. To learn about CRU’s global commodities research and analysis services, visit www.crugroup.com.

Domestic HR is now theoretically 6.6% more expensive than imported material, up from 5% last week. Recall that US prices were ~12% cheaper than imports last July.

In dollar-per-ton terms, US HR is now, on average, $46/st more expensive than offshore product (see Figure 1). That’s roughly $12/st higher vs. the prior week but still up about $118/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 side highlights prices over the last two years and the right 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, 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 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 Thursday, Jan. 30, the CRU Asian HRC price was $445/st, flat 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 ~$646/st. As noted above, the latest SMU US HR price is $700/st on average.

The result: Prices for US-produced HR are theoretically $54/st higher than steel imported from Asia – roughly $15/st higher week-over-week (w/w). The premium is still significantly lower than roughly a year ago when US HR was as much as $281/st more expensive than Asian products.

Italian HRC

Italian HR prices were $7/st higher this week at $567/st, according to CRU. After adding import costs, the delivered price of Italian HR is, in theory, $657/st.

That means domestic HR coil is theoretically $43/st more expensive than imports from Italy. With Italian and US tags trending in the same direction, the spread is just $8/st higher w/w. Recall that US HR was $297/st more costly than Italian hot band a year ago.

German HRC

CRU’s German HR price was largely flat, up just $1/st to $568/st this week. After adding import costs, the delivered price of German HR coil is, in theory, $658/st.

The result: Domestic HR is theoretically $42/st more expensive than HR imported from Germany, up $14/st from last week. Stateside hot band was at an $18/st discount about four months 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.

Canadian activity continues to rebound following the typical seasonal slowdown. This week’s count of 258 marks the highest rate since March 2018. Historically, Canadian counts often surge through February, then decline as warmer weather and thawing ground conditions limit access to drill sites and roads.

The international rig count, updated monthly, decreased to 909 in December. This wa down 10 rigs from the November count and 46 fewer than the same month 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.

North American vehicle production, including personal and commercial vehicles, totaled 992,046 units in December, nearly 23% below 1.282 million units in November. It’s roughly 5.7% behind the 1.0.52 million units produced one year ago.

Below in Figure 1 is a five-year snapshot of North American light-vehicle production since 2019 on a rolling 12-month basis with a y/y growth rate. Also included is a five-year snapshot of the average monthly production, which includes seasonality since 2019.

A short-term snapshot of assembly by nation and vehicle type is shown in the table below. It breaks down total North American personal and commercial vehicle production into US, Canadian, and Mexican components. It also includes the three- and 12-month growth rates for each and their momentum change.

For the three months and 12 months through December, the growth rate for total personal production in the USMCA region remains behind, while commercial vehicle assemblies remain ahead. The momentum shift remains in place since commercial assembly vehicle segments saw an appreciable gain to kick off Q4’24.

Personal vehicle production

The longer-term picture of personal vehicle production across North America is shown below. The charts in Figure 2 show the total personal vehicle production for North America and the total for the US, Canada, and Mexico.

In terms of personal vehicle production, this segment saw a 22.7% month-over-month (m/m) drop in December. Assemblies last month totaled 734,189 units, down from 949,432 units in November. It’s 6.9% below the year-ago total and the lowest output since July 2022.

The US saw a 22.2% m/m production cut, with 132,757 fewer units produced in December. Mexico produced 64,542 fewer units (-25.9%), while Canada’s production was down 17,944 units (-17.7%).

Production share across North America was little changed. The US’ personal vehicle production share of the North American market was 63.9%, followed by Mexico and Canada at 25.7% and 10.4%, respectively.

Commercial vehicle production

Total commercial vehicle production for North America and the total for each nation within the region are shown in the first chart in Figure 3 on a rolling three-month basis. Commercial vehicle production in the US and Mexico and their y/y growth rates, as well as the production share for each nation in North America, are also shown.

North American commercial vehicle production was also down in December. The region saw a 22.3% m/m decline with a total of 257,857 units, down from 332,040 in November. December’s output was 2.3% below last year.

The US saw a 22.3% m/m cut, with 48,715 fewer commercial vehicles assembled in December. Canada followed, down 31.4% (-4,524 units), and then Mexico, down 21.1% (-20,944 units).

The market share across the region was also largely unchanged. The US total share was 67%, followed by Mexico with a 29% share, and Canada with a 4% share in December.

Presently, Mexico exports just under 80% of its light-vehicle production, with the US and Canada as the highest-volume destinations.

Editor’s note: This report is based on data from LMC Automotive for automotive assemblies in the US, Canada, and Mexico. The breakdown of assemblies is “Personal” (cars for personal use) and “Commercial” (light vehicles with less than 6.0 metric tons gross vehicle weight rating; heavy trucks and buses are not included).

“We are excited to have Kurt Russell, with his tremendous experience in the metal coatings industry and successful track record leading AZZ Precoat Metals, move into the newly created chief strategic officer role to support our stated objective to grow more aggressively in the coatings space,” stated AZZ CEO and President Tom Ferguson.

Jeff Vellines, president of AZZ Precoat Metals for almost a year now, will remain in that role and also take on additional duties as Precoat’s COO.

“Both promotions are a testament to our leadership bench strength, commitment to developing great talent, and emphasis on executing our strategic plans,” he added.

Fort Worth, Texas-based independent galvanizer AZZ Inc. posted solid results in its most recent earnings report and continues to seek M&A opportunities within the galvanizing industry.

Recall that AZZ purchased St. Louis-based Precoat Metals for $1.28 billion in 2022.

Precoat Metals’ sales of $235.1 million accounted for 58% of AZZ’s total sales of $403.7 million in the quarter ended Nov. 30, 2024.

The increase was driven by a jump in new orders and production, the report stated, but falls in supplier deliveries, employment, and order backlogs moderated the increase.

A look at some of the numbers

New orders rebounded 13.8 points, reversing last month’s decline. This leaves it the highest level since September 2024 and above the 2024 average, the report stated.

Production expanded 4.0 points to a similar level to that seen in November, the report found.

Employment dropped 9.0 points to the lowest level recorded since June 2020. Two-thirds of respondents reported unchanged employment while nearly 30% reported lower levels of employment, the report stated.

Inventories gained 14.9 points, returning to expansionary levels for the first time since November 2023. This is after four consecutive months of decline, the report found.

Prices paid eased 2.7 points, the fourth successive decline and the lowest level since July 2024.

The survey ran from Jan. 1 to Jan. 16. The Chicago Business Barometer asked one special question: “How do you see business activity growing in the first half of 2025, by percent?”

Slightly more than half (54%) answered between 0% – 5%, while one quarter expected no growth.

Trump tariffs: real or not?

The almost daily stream of new iterations of the threatened tariffs had left the industry more confused than certain about how to establish a playbook. What did we learn from discussions with people across the spectrum of the value chain?

There seems to be consensus that Mexico will be hit with the 25% tariffs. Mexico is blamed for both drugs and undocumented immigration. It will pay the price for both.

Another contributing factor is Mexico’s 0% tariff structure on primary aluminum, which is perceived to allow Chinese and other origin metal to indirectly leak into the US in the form of semis and finished goods produced within Mexico. Mexico’s unwillingness to publish detailed import statistics on its metal trade flow has only heightened suspicions that China is using Mexico as a backdoor into the US to evade duties applied on direct shipments.

The view on Canada was far from consensus. Some expected that they would be hit with the 25% duty initially, then negotiate for exemptions once it was determined what exactly Trump wanted in exchange. He is fixated on the fact that the US runs a trade deficit with Canada, which he considers a subsidy to their economy. The facts tell us that Canada’s trade surplus is driven exclusively by large crude oil exports to the US. In fact, Canada supplies 60% of the imported crude coming in and has done so for more than 30 years. If you removed crude oil from the equation, the US runs a trade surplus with Canada, even considering the $11.5 billion of aluminum that Canada sends south each year.

If Trump wants to run a trade surplus with Canada, he faces the dilemma of taxing that crude oil and trying to force the Canadians into a few options: to divert shipments; to leave the oil in the ground for better days; or to see US crude prices rise to reflect the clearing price/cost of that Canadian crude with a 25% tariff applied. The latter outcome would raise energy costs and inflation, in direct contradiction to his campaign pledges about costs.

The aluminum market was on the fence. It had been discounting a full-throated implementation of tariffs. The 25% tariff on Canadian aluminum on paper would send premiums to $0.45-$0.50 per pound. Spot premiums are $0.24-$0.25 per pound. The forward curve, as represented on the CME, shows April through December 2025 at $0.28-$0.30 per pound, Q1’25 at $0.31 per pound.

Unintended consequences of taxing Canada and Mexico loom large

One very alarming consequence of hitting Canada with a 25% tariff is opening the door to imported primary, semis, and finished goods from other origins that might come in at proposed 10%-20% universal tariffs.

Conventional wisdom has been that if the 25% is applied, Midwest premiums would respond accordingly. Given that most flat rolled products, extrusions, and castings are directly indexed to the Midwest, a full pass-through would be done – and the downstream market would be unharmed. Wrong! This ignores the risk created by the difference between Canada’s 25% tariff and the other origins at 10%-20%.

Semis and finished goods from non-Canadian origin could enter the US, enjoying a 5%-15% cost advantage over domestically produced goods having to absorb a Midwest premium reflecting that 25% Canadian tariff. This could lead to an increase in imports.

Primary metal imports from non-Canadian origins would also enjoy this tariff differential. One could expect imports from the Middle East to rise. This would effectively mean that our import supply chains could get longer as the market exchanges Canada for the Middle East.

The repercussions on scrap are also large.

A tight used beverage can market gets tighter

The 25% duties on Canada and Mexico could potentially wreak havoc on the used beverage can (UBC) market. A central theme at the conference was how tight UBCs were and how unprofitable it was to melt them at the current price. These potential duties would aggravate the situation and risk wholesale diversion of valuable Canadian and Mexican supply to Asia.

The US relies on a substantial flow of UBC from Canada’s deposit system. These are extremely high quality, dependable receipts. A 25% tariff on these cans adds about $0.29 per pound to the duty-paid cost to the US can sheet mills.

UBC prices today are already untenable for the mills, trading at 83% of Midwest P1020. Considering that melt loss alone is 12%, UBC should never be worth more than 88% of P1020 less processing costs. The gap between the 83% market price and 88% leaves 5% to cover processing. That is less than $.06 per pound today, and that’s inadequate. So, UBCs today are already a losing proposition for the mills even before the imposition of the new tariff.

Trump’s advisers say these tariffs will be absorbed by the exporter and it will not impact the US buyer. That is simply not factual. In the case of UBCs, the reaction will be swift. These cans will be exported off the Canadian West Coast to Asia, notably South Korea, Thailand, and now China – which is showing strong interest in importing UBC.

This is one reason we hear industry leaders in the US are already lobbying for Canadian scrap to be exempt from the tariff.

At the same time, Mexican UBC, which have traditionally flowed north to the US will seek the same Asian markets as their Canadian counterparts. This will be particularly harmful to Aluminum Dynamics Inc. (ADI), which has invested millions in their San Luis Potosi recycling facility. This plant was designed to capture the large Mexican UBC supply and turn it into sheet ingot for export to the new Columbus, Miss., rolling mill. A 25% tariff on the sheet ingot would make this movement economically untenable.

This would push ADI into the US domestic market to bump heads with the incumbent players who have already pushed prices up to uneconomic levels.

Could tariffs be a blessing in disguise for the recycling market?

The risks to UBC supply described above are very real.

However, another school of thought was that the Canadians would be hit with the 25% tariff and that Midwest would fully price P1020 in at the higher $0.45-$0.50 per pound premium over LME. Then it would be possible that the scrap versus P1020 spreads would open up for domestic supplies.

There is logic here. Historically, whenever we see upside volatility in P1020 prices (late 1980s, mid-1990s, 2007-2008, 2011, 2022), the discount for scrap to primary widens. A move from $0.25 per pound premiums today to $0.45-$0.50 post implementation of tariffs could produce the same outcome.

However, the wild card here arguing against this for UBC is the new element of Asian demand pulling Canadian and Mexican cans away from the US. Other grades, sourced within the US, may very well experience these widening of discounts.

Uncertainty breeds economic inertia

One area of broad agreement in Florida was that the unknowns around tariff policy were killing capital investment across a host of industries. Despite the hype about these tariffs being used to stimulate a revitalization of American industry, it is chilling investment. People are concerned about more inflation – not less inflation. That means interest rates might not come down and might even go up.

Overall demand for aluminum is still viewed as “spotty,” especially amongst the value-added products such as billet, sheet ingot, and foundry alloy. The exception might be aluminum rod, where expectations are bullish because of the demand for more electricity to feed the tremendous growth in AI and data centers in general. The downside to this AI/data center growth story is that it puts power costs for other industries very much in jeopardy.

The latest news about Stargate, the massive AI project, is viewed as potentially raising electricity costs. That makes Century Aluminum’s new greenfield smelter an even tougher task.

Editor’s note
This is an opinion column. The views in this article do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at info@steelmarketupdate.com.

Market conditions continue trending positively, as LV sales surprised to the upside for a third straight month. Holiday incentives and an ongoing gradual decline in rates drove the gain.

Auto sales jumped 9.3% y/y, while light-truck sales rose 4.6%. Light trucks accounted for 84% of December’s total sales, above the 82% share a year earlier.

December’s average daily selling rate (DSR) was 59,543 vehicles – calculated over 25 days – up 26.1% from the 56,110-unit daily rate a year ago.

Figure 1 below shows the long-term picture of US sales of autos and lightweight trucks from 2019 through December 2024. Additionally, it includes the market share sales breakdown of last month’s 16.8 million vehicles at a seasonally adjusted annual rate.

Auto production has recovered from the pandemic and is now largely above 2019 levels. The rebound has come despite the continued impact of higher average transaction prices (ATP) for new vehicles.

For 2024, the ATP was $48,001, a whopping 24.6% (+$9,519) above 2019’s ATP, according to data from Cox Automotive. December’s ATP of $49,740 was up 3.4% m/m and 2% (+981) higher y/y.

Incentives rose 0.3% m/m, reaching a 45-month high of $3,442. Incentives now represent roughly 6.9% of the ATP. Compared to last year, incentives are up 31%, or by $809.

The annualized selling rate of light trucks for December was 13.84 million units, up 1.2% m/m and 7.1% y/y. Annualized auto selling rates increased by 0.4% m/m but were down 5.2% from last year.

Figure 2 details the US auto and light truck market share since 2014 and the divergence between average transaction prices and incentives in the US market since 2020.

Editor’s note: This report is based on data from the US Bureau of Economic Analysis (BEA), LMC Automotive, JD Power, and Cox Automotive for automotive sales in the US, Canada, and Mexico. Specifically, the report describes light-vehicle sales in the US.