Final Thoughts

So where exactly are prices now? A lot might depend on how many tons you’re buying, according to market participants.

Let’s say you’re buying 100 tons. You might pay something in the low $1,200s per ton (low $60s per cwt) for hot-rolled coil. But if you’re buying significantly more – think 1,000 tons or more – you might pay something more like $1,100 per ton ($55 per cwt). Probably even less if you’re buying 10,000 tons or more.

Does that kind of discrepancy mean the sky is falling? No. But the significant discounts that big tons can attract are yet another indication that we’re finally getting back to a “normal” market following the shocks of the pandemic and the war in Ukraine.

Another “normal” feature of the market that we would expect to see re-emerge is more regionalism in prices. Order entry might be just fine depending on where you are and what markets you serve. But there is competition for orders – both from other domestic mills and from imports – which usually means lowering prices to attract business.

US prices are already coming down at a fast clip, quick enough that it might discourage some consumers from buying imports now that won’t arrive until September or later. But that won’t stop material that was ordered in March and April, when domestic prices were high, from arriving over the summer months.

Also, it will be important to keep an eye on trade policy abroad. We tend to focus on developments with Section 232. But trade flows are also changing because of barriers put in place abroad, notably by the EU in response to Russia’s invasion of Ukraine.

And EU safeguard measures on steel imports are arguably just as important to keep track of as Section 232. Because any tightening of EU restrictions could result in steel flowing elsewhere, potentially to North America.

And what will happen with Vietnam as the country becomes an increasingly large supplier to the US flat-rolled steel marketplace?

The US had imported 293,606 metric tons of flat-rolled steel from Vietnam through May, according to Commerce Department figures. That places Vietnam behind only Canada (1.01 million tons), South Korea (340,995 tons), and Mexico (339,156 tons).

Imports from Canada and Mexico are typically high because of how interlinked North American steel supply chains are. And tonnage from South Korea can only go so high because the country is subject to a Section 232 quota.

How high might tonnage from Vietnam, which is subject to a Section 232 tariff of 25% but not a quota, go for the balance of the year? And what impact might those tons have on areas like the Gulf Coast, which are traditionally more exposed to import prices?

These questions are just as important to consider as where and when prices might bottom. We’ll be keeping any eye on them this summer.

In the meantime, thanks from all of us at Steel Market Update for your business.

By Michael Cowden, Michael@SteelMarketUpdate.com