Galvanized buyers brace for market shifts amid rising tariffs

The moderator opened this month’s discussion noting what’s been going on since last month’s call: “I would say pretty much everything is up… Chatter is up. Prices are up. Stress is up.”

“It does seem, from my perspective, a little spotty,” he continued. “But I would say, generally, there is a lot of optimism, and demand is picking up. Certainly, inquiries are definitely picking up.”

Buyers are unsure whether this surge in activity will hold or fade into another cycle of uncertainty.

Market momentum and demand dynamics

Compared to the uncertainty at the start of the year, galvanized steel buyers are now seeing stronger market activity.

January was sluggish due to weather disruptions, said one buyer. But February witnessed a surge in orders as customers rushed to secure material ahead of expected price hikes.

But this sudden spike in demand might not reflect underlying consumption growth, however. Some saw it as a reactionary move to looming tariffs and duties rather than a sign of sustained strength.

One service center executive said his company was seeing buyers who typically make spot purchases now looking to lock in 90-day contracts — a shift that underscores the uncertainty in the market.

The executive also noted that they’ve been seeing requests for larger orders compared to the sporadic, smaller-volume purchases that characterized much of last year.

Tariffs and trade tensions stir uncertainty

Tariffs remained a dominant concern for buyers on the call. That includes not only revamped Section 232 measures on steel but also Trump’s other, still-uncertain tariffs, which could amplify recent market volatility.

One participant speculated that prices could rise beyond the immediate 25% tariff increase, considering the corrosion-resistant steel trade case is ongoing as well.

Another pointed out that the combined effect of tariffs and coated AD/CVDs could push costs even higher, further discouraging imports.

“We’re hearing from multiple traders that there’s some boats steaming in that have to get here before March,” one buyer commented. “There may be very, very limited import coated products – galvanized and Galvalume – in the US” after that.

Another buyer agreed. “I think it’s a hard sell to see anybody trying to bring steel into the US this year and paying up to 35-40% tariffs,” they commented. “What we’re hearing is that most countries are not going to be participating in import on coated products this year.”

Pricing pressures and supply constraints

Steel prices are on an upward trajectory. Mills have responded aggressively, limiting spot availability and pushing contract prices higher. Several buyers observed that mills are holding firm on increases, signaling confidence that the recent hikes will stick.

One participant noted the rapid shift in pricing, stating. “We are at $985 on galvanized base as of last week. That’s up $135 from a month ago, and that’s probably already outdated,” they said.

Indeed, in Tuesday’s price report, SMU assessed average galvanized base prices to be $1,050 per short ton — up $65/st from last week and $200/st from a month ago.

While some service centers are still working through inventory built up in late 2024, others are scrambling to secure additional material before prices climb further. One distributor admitted that their early-year forecasts of lower steel prices in 2025 have already been rendered inaccurate by the tariff-driven surge.

And most galv buyers on the call didn’t think the increases were over. A snap poll revealed that 36% thought prices would rise by at least $80/st over the next month. And 45% saw an even steeper rise of at least $120/st.

Looking further out, roughly half (52%) of the buyers polled thought prices would be up by more than $120/st six months from now. Such an increase would put galvanized base prices at $1,170/st on average – right around the time of annual contract negotiations and SMU’s Steel Summit. Another 20% thought prices would be at least $1,250/st by that time.

Opportunity amid volatility?

Despite the general chaos, some saw the potential for opportunity.

Several participants think supply constraints will give distributors and service centers more pricing power. “Some companies are going to be short on supply, and that opens the door for those who planned ahead,” one executive said.

Still, questions linger about demand sustainability. While February and March look strong, buyers were unsure whether the flurry of order activity reflected increased demand or merely front-loaded buying because of tariff concerns.

One buyer summed up the prevailing sentiment: “Everything is pointing up — pricing, sentiment, order activity. But the real test will come once the immediate reactionary buying subsides. Will there be enough true demand to support these levels through mid-year? That’s the big unknown.”

SMU participates in a monthly steel conference call hosted by HARDI and dedicated to better understanding the galvanized steel market. The participants are HARDI member companies, wholesalers who supply products to the construction markets. Also on the call are service centers and manufacturing companies that either buy or sell galvanized sheet and coil products used in the HVAC industry and are suppliers to HARDI member companies.