Steel Execs Expect No Price Correction

Tariffs mean higher prices. “We may be able to pass on the material price increases initially. But the longer this continues, the greater the possibility our customers will begin buying the finished product we supply from overseas. The fact is, we’ve seen this movie before with the Bush tariffs. Is history repeating itself?” he asked.

One service center executive from the Midwest said he expects plate prices to continue rising. “I think as long as lead times stay over eight weeks, the mills will continue to look for opportunities to move the price.” He expects availability of plate to be tight in the third quarter. “The planned outages at three mills and issues at two others in April are having an effect on third-quarter availability. In my opinion, Q3 is done,” he said.

“I’m a firm believer we will not see a correction in pricing,” agreed a flat roll distributor in the Midwest. “Lead times are still long, supply is tight and there are no ‘good’ foreign offers. I think we stay flat to slightly up in the coming months.”

One service center and manufacturer in the South, who does business with Mexico, also sees steel prices inching higher. “The NAFTA negotiations are not going well. NAFTA alone will be a significant catalyst to move prices higher if a deal is not reached. We may see $1,000 per ton HR. Who knows?”

Most in the industry are watching closely to see how the tariff exclusion process plays out. It appears the only way a country will be granted an exclusion from the 25 percent tariff is if it agrees to a quota on its steel exports to the United States, noted one building products manufacturer in the East. “So, imports will not go away. Supply will either be limited or the price will be up 25 percent.” Both scenarios support higher prices.

Some executives expressed a reluctance to place orders for foreign material. “I’m sure everyone else is like us and nervous about placing orders for steel that won’t arrive until October in light of all of the uncertainty,” said the building products executive. “While we have not seen signs that steel prices will crash, no one wants to be bringing in significant quantities of steel at high pricing in the event prices go down.”

Others see limited risk in placing foreign orders, with steel supplies so tight in the U.S. “Manufacturers need steel. With the domestic mills not producing enough, there is not much risk,” said one source. “As long as the tariffs are factored in and we aren’t buying from countries with complicated quotas, we’ll still buy foreign,” commented another, adding, “Enforcing quotas on the EU as a whole seems challenging.”