SMU Community Chat: Timna Tanners on ‘Trumplications’ for steel in 2025

In a presentation titled “Trumplications,” Tanners shared what she sees for steel in the coming year, including the likely impact of changing trade policies and interest rates on supply and demand fundamentals.

Upside opportunities

Trump’s second-term policies will present a “mixed bag” of both positives and negatives for the steel industry.

On the positive side, more business-friendly measures, including lower taxes and less regulation, should lead to more business investment.

Another benefit, according to Tanners, is the stricter enforcement of trade cases and tariffs. Combined with the likelihood of lower domestic steel prices, this should limit imports next year.

“There is plenty of domestic capacity waiting to fill the void of those imports,” she commented.

She said the ‘sheet storm’ still has a lot of energy, adding ~3-5 million short tons to the steel supply next year. She mentioned added volumes from U.S. Steel’s Big River 2 expansion, Steel Dynamics Inc.’s Sinton ramp-up, and EAF projects at Algoma Steel and AM/NS Calvert.

One “pretty important swing factor into the supply side for 2025,” she noted, is if the U.S. Steel/Nippon Steel deal falls through. Should that happen, she sees it likely that USS would idle a blast furnace at its Mon Valley Works in Pennsylvania and then could potentially shut the entire facility.

Tanners also addressed the greater potential for more aggressive trade policies under Trump’s new administration. This could be seen as a positive, as a tough stance on trade could be leveraged as a negotiating tool, potentially leading to more favorable trade terms.  

Additionally, we could see the renegotiation of trade deals, like the USMCA, which would create more export opportunities for US producers, she noted.

“Volatility lovers rejoice!” she said of a second Trump term. “If you’re in the futures market, I think you’re gonna be busy and probably more profitable.”

Downside risks

Of course, there are also risks in Trump’s second term. Tanners expressed concern that the new administration’s economic policies could stoke inflation and lead to higher interest rates.

“There’s no debating that Candidate Trump said that tariffs were one of his favorite words,” she noted.

She pointed out that, generally speaking, tariffs can drive inflation, hurt demand, and invite retaliation.

Inflationary pressures from tariffs and other policies could eventually push the Federal Reserve to raise interest rates further.

She sees this as a major risk factor for steel demand, particularly in construction and automotive, which are highly sensitive to interest rate movements.

Clean energy projects are also at risk under a Trump presidency, Tanners said. Offshore wind and other green energy projects could see reduced funding or be canceled altogether, thus reducing demand for the steel required for those projects.

Steel price forecast

Tanners said she is not seeing much evidence of success in some mills’ recent attempts to raise steel prices.

But there is room for higher scrap prices, which have been “shockingly flat and depressed” this year. “I just don’t see another year of depressed scrap,” she stated. Admitting that she’s been wrong before, she forecasts a modest uptick in scrap prices and, in turn, steel prices next year.

However, with plenty of domestic supply to fill the gaps left by fewer imports, she doesn’t expect any big price spikes.

On the morning of the chat, Wolfe Research updated its 2025 steel price forecast. It expects prices for hot-rolled coil to average $740 per short ton (st) in Q1, $800/st in Q2, $720/st in Q3, and $740/st in Q4. Next year’s anticipated average of $750/st is just $20/st lower than 2024’s estimated average of $770/st.

“You can’t have it all.”

Regarding Trump’s anticipated policies, Tanners cautioned, “You can’t have it all.”

That is, the administration can’t have insulation from global markets, falling interest rates, lower inflation, aggressive tariff/tax cut policies, and a widening budget without some trade-offs.

What will those trade-offs be? Time will tell.

Cowden’s discussion with Tanners also touched upon industry consolidation, green steel initiatives, raw materials costs, “Drill, baby, drill!” and more.

If you missed it, SMU subscribers can catch a replay of the discussion (and all past Community Chats!) on our website.

Thank you to the 700+ who registered for the chat with Timna on Wednesday. Stay tuned for information on upcoming Community Chat webinars.