Final Thoughts

U.S. Steel, Trump, and Elvis?!

The latest example: President-elect Donald Trump on Monday evening said he was “totally against” U.S. Steel being acquired by Nippon Steel in a post on Truth Social.

Shares of the Pittsburgh-based steelmaker plunged. And almost immediately, I heard speculation from some of you about what Trump’s post really meant. What can I say? We live in conspiratorial times.

Is Trump really against the deal? Or is he trying to force President Biden to approve it before he leaves office – along with any baggage associated with an angry USW? And what does Elvis, who Trump posted an AI-generated image of himself with shortly thereafter, have to do with any of it? (Elvis lived in Memphis, Tenn. Big River is near Memphis. And so Trump has Big River’s back too?)

Tariffs galore

You could say it’s all a circus. And no doubt there is plenty of that to go around. But Trump has been nothing if not consistent about his messaging around tariffs.

The threat of them compelled Canadian Prime Minister Justin Trudeau to come to the negotiating table. Or at least the dinner table at Mar-a-Lago. Joking about Canada being the 51st state might have led to personal and professional embarrassment for Trudeau. But maybe Trudeau did Canada a solid simply showing up? Let’s assume tariffs are going to happen. Does breaking bread at Mar-a-Lago mean you’re the one to get 10% instead of 25%? We’ll see.

And it’s not just Canada. Mexico, and China that are facing new tariffs. Trump on X threatened to impose 100% tariffs on Brazil, Russia, India, and China (aka, the BRICs) if they move away from the US dollar.

Like a lot of this tariff talk, it’s hard to know what’s a real threat and what’s posturing. A 100% tariff on all Brazilian imports, for example, would make Brazilian pig iron – one of the few viable sources following Russia’s invasion of Ukraine – prohibitively expensive for US EAFs.

And other trade restrictions too

Speaking of EAFs, it’s not like blanket tariffs are the only trade risk in Trump 2.0. The Steel Manufacturers Association (SMA), which represents EAF mills, wants the Trump administration to end the tariff-rate quotas (TRQs) on the European Union, the United Kingdom, and Japan. Recall the TRQs were negotiated by the Biden administration to take the hard edge off of Section 232 on some of the United States’ closest allies.

The SMA also suggested that it wants to see South Korea’s Section 232 quota reduced. That matters because South Korea is one of the largest foreign steel suppliers to the US – behind only Canada, Mexico, and Brazil. Rumors of a reduction in South Korea’s quota had been ping-ponging around the market even before SMA officially put the matter before the Trump administration.

Meanwhile, the coated trade case against 10 countries, initiated under the Biden administration, remains on track.

You can see why there continues to be speculation that US mills could see lead times stretch out if they get an influx of business because of all of this protectionism. (Is that still a bad word? Or is it a good one in a mercantilist administration? But I digress.) Perhaps especially from customers concerned about buying from Mexican and Canadian mills at risk of getting clobbered by tariffs.

And yet

The result of all of this… has been another week of sideways pricing. A little up or a little down depending on the product.

Cliffs officially remains at $750 per short ton (st) for spot tons of hot-rolled (HR) coil. It has been there for the last 11 weeks. It’s a similar story for Nucor’s CSP, which has been at $750/st for three weeks.

CSP had some real street cred when it was introduced last spring. It retained much of that credibility throughout the summer. But how relevant are mill published prices when most indices have been well below them ever since?

Is it possible that Trump runs a similar risk with talk of tariffs? Futures markets dropped on Tuesday despite more headlines about Trump, trade, and tariffs. SMU’s hot-rolled coil price has been holding relatively steady between roughly $670-700/st since mid-August. And we haven’t seen the “Trump bump” we saw following his election in 2015.

Even presidential social posts can’t change that USS’ Big River 2 has been selling startup tons into the market at approximately $600/st – give or take. I’m not saying that’s a going market price. A startup mill typically has to buy its way into the market. And that’s why you haven’t seen numbers that low reflected in our ranges.

I mention it because it underscores the stubborn fact that demand isn’t great. Trump can’t wave a Truth Social wand and reduce bloated Stellantis inventories or increase energy and ag prices. And new capacity, encouraged by Section 232, continues to ramp up.

Or not yet?

That said, the fear of Trump’s social feed is real. “I can tell you that we are taking the cautious approach to buying only from domestic sources due to the possibility of new tariffs posted on X or Truth Social Media in the middle of the night,” one steel buyer told me.

A mill executive said his company was seeing slightly better prices this week. Perhaps because lead times are solidly into January for his company. Perhaps because of Trump’s tariffs threats. His take: “December, as you know, is … dead. But I honestly would not be surprised if prices are a solid $100-150 higher come March.”

A second mill source echoed that. He said contracts had mostly been rolled over from last year. But he added that buyers who had been threatening to put fewer tons under contract in 2025 ultimately backed off. “With the threat of Trump’s tariffs on Mexico and Canada, along with 232 review and anti-dumping, no one wants to be short contract tons,” he said.

I guess the question now is this: How long do steel prices continue to drift sideways?

Trump has a (pretty funny) meme on his Truth Social page – him popping out of a Thanksgiving turkey on Biden’s table and dancing to the Village People’s YMCA. When do steel prices do something similar?

But Thanksgiving is over. So maybe I should use some Christmas imagery. How about this: an AI-generated image of a coil in a manger. Why that? Well, if everyone thinks prices are going to go up at some point because of Trump and trade restrictions, at what point does everyone come back into the market – leaving no room left at the inn?