The HR coil base price for Nucor subsidiary CSI is also flat from last week at $755/st.

Lead times of 3-5 weeks will continue to be offered, but Nucor noted that customers should contact their district sales manager for availability.

SMU’s Aug. 27 check of the market pegged current HR coil spot prices in the range of $670-730/st, with an average of $700/st. That marked the fifth consecutive week of HR prices ticking higher.

Our weekly pricing service will not be impacted.

We will resume our regular publication schedule and our pricing service on Tuesday, Sept. 3.

The numbers

Both Mexico and the US have increased their bilateral trade in steel. However, the US has done so to a greater extent. The monthly average of finished steel exports from the US to Mexico in 2024 increased by 19% compared to the baseline 2015-2017 volume, while Mexico’s exports to the US grew by 7% in the same period.

From January to June 2024, Mexico’s finished steel exports to the US decreased by 13% compared to the same period in 2023, while US shipments to Mexico increased by 3% during the same period. This increase is primarily due to higher exports of flat steel. These trends are consistent with those observed in 2023, when Mexico’s exports to the US fell by 28% compared to the previous year, whereas US exports increased by 11%.

In addition to the above, it is important to highlight that the difference in the magnitude of the export volume of both countries has widened more and more each year. In 2022, US exports of finished steel were 13% higher than those of Mexico, but this difference increased to 74% in 2023, and if we annualize the January through June Census Data, the gap is on pace to grow to 94%. This illustrates that the US has benefited more from trade in finished steel than Mexico.

The downward trend in Mexican exports to the US will continue in the coming months, according to the most recent information from preliminary Census data and SIMA license data.

Let’s drill down into transshipments

The claims by some US mills that there is transshipment of Chinese steel through Mexico are incorrect.

In 2023, statistics from the US show that 144,000 metric tons (mt) of steel melted and poured in China entered the US via a third country. The top three origins were Thailand (52%), Oman (15%), and Canada (13%), while Mexico was 11th, exporting only 334 mt of Chinese melted steel.

From Mexico’s perspective, those 334 mt represented only 0.01% of Mexican finished steel exports in 2023.

Since implementing melted and poured tracking in October 2020, only 0.01% of the finished steel exported from Mexico to the US has been melted in China.

To conclude, what are the numbers telling us?

First, Mexico is not a backdoor for unfair trade from China but is a very important destination for US steel exports.

Second, there are strong bonds between both countries’ supply chains.

And third, there are still some trade inconsistencies that need attention.

To compete in a regionalized world, improve our economies, attract more investments, and fight against China’s unfair trade practices, our regional ties could and must be reinforced.

Engaging in a steel trade war based on myths and misconceptions is not a strategic decision; it won’t benefit the majority and will only diminish our region’s competitiveness.

Editor’s note

SMU welcomes opinions from across the steel industry. We’re happy to share the thoughts above from Salvador Quesada Salinas, general director of Mexico’s steel chamber, Canacero. If you have an opinion you’d like to express to the broader steel community, please contact us at info@steelmarketupdate.com.

Additionally, he noted that he had secured the support of Minnesota Gov. Tim Walz (also currently the Democratic vice-presidential nominee) for the Nippon/U.S. Steel merger when Mori visited the US in June.

The article noted that Walz has not commented on the deal since then.

Recall that USS has extensive iron ore operations in Minnesota.

A request for comment from Nippon Steel was not returned by the time of publication.

Background

The deal for U.S. Steel, first proposed in December and valued at over $14 billion, still faces US government regulatory hurdles. It also faces resistance from various politicians and the United Steelworkers union.

Nippon has recently sweetened the deal in a bid to court the union with significant capex promises, amounting to over $1 billion at various USS operations.

Key points and takeaways

We go over the big highlights of the survey in the next Final thoughts. Here are some other key points that we think are worth your time. (And, again, our premium subscribers can follow along with the latest results here.)

• Steel Buyers’ Current Sentiment edged back up for a second straight survey but is still just about 14 points above a four-year low (slide 9). Future Sentiment (slide 11) saw a bigger jump, up 17 points vs. the prior market check.
• Lead times for HR coil are still largely stable, though still moving marginally higher. Lead times for tandem products have improved modestly, while plate slipped (slide 13).
• On pricing, buyers said that most mills remain willing to negotiate. But there was still a steady decline in the number willing to cut deals after both Nucor and Cliffs moved HR prices above $700/st (slide 16). We’ll keep tabs on whether negotiation rates continue to slide in the weeks ahead, but they remain between 71-88% depending on product.
• On the raw materials front, about two-thirds of respondents still expect scrap prices to be sideways again in September (slide 19). But fewer (25% currently vs. 31% prior survey) expect prices to move up next month. Another 14% anticipate a decline, up from 6% midway through August.
• What might keep sheet prices from a sharp rally? Some 62% of respondents said they will meet forecast in August, while another 31% said they will miss their business forecast (slide 20). Only ~7% think they will exceed forecasts in August. Also, 80% of service centers said they are releasing less steel (slide 28) than a year ago, up from 67% earlier in the month.
• What might support higher prices? Service centers reported lowering prices – likely a continued reaction to mills trying to move tags up (See slide 38, one of our favorites.) That’s a significant shift from the nearly 20% who were cutting prices just two weeks ago. But it might be too soon to predict any surge in prices. Just about 20% of service centers reported increasing prices.
• Another notable trend, nearly 30% of manufacturers said they are lowering inventories, while only 6% of services say they are building inventories (slide 31.)

There’s a lot more to unpack in the survey. Be sure to check out the next Final thoughts for some of the comments and key reactions directly from our sources.

Protectionism will increase as decarbonization efforts arise

Although global steel demand is expected to rise, CRU’s Steel Long Term Market Outlook projects that steel trade volumes will decline in the long term across the globe and steel supplies will become increasingly regionalized.

One of the key drivers for this regionalization will be protectionism, which has been rising in recent years and is expected to increase further due to decarbonization efforts in different regions. A proliferation of different new policies and Emissions Trading Schemes (ETS) similar to the European Carbon Border Adjustment Mechanism (CBAM) will potentially be implemented globally to avoid carbon leakage, or in other words, the transfer of production from a jurisdiction with high emission constraints to a jurisdiction with fewer constraints.

Numerous governments globally have already started to work on domestic carbon pricing and trading schemes to create a level playing field and protect domestic producers, such as the UK, Serbia, Turkey, Australia and China.

The emergence of new carbon pricing schemes will eventually lead to the establishment of carbon clubs among like-minded countries, in which members would adhere to agreed environmental standards – for example maximum emission intensities – in return for recognizing each other’s domestic policy regimes.

These emerging ETS will reconfigure international trade flows and, most importantly, lead to structural changes in steel costs and prices.

Different decarbonization paths will shift the steelmaking cost landscape

Different regions are moving on different paths towards net zero and the decarbonization of the steel industry, depending on decarbonization targets and the level of policy responses, as well as the local economic and steel demand profiles. Resource availability – such as raw materials and energy, the age of existing assets, and technology readiness – will also influence the diffusion of new steelmaking technologies and the decarbonization time scale globally.

In our Steel Long Term Market Outlook analyses, regional cost competitiveness changes between 2030 and 2050 based on projections of new steelmaking technologies deployment, which are aligned with regional progress toward decarbonization. Overall, regions that have stringent decarbonization targets and powerful market tools to ensure targets will be met will face higher production costs due to the substantial investments required to adopt abatement technologies.

In parallel, lower-cost suppliers facing less pressure to invest heavily in decarbonization (either because of a low level of policy ambition or strong cost competitiveness of low-emission steel production) will increase their share in global exports, especially Russia and CIS, India, and the Middle East. Russia and CIS will remain the most cost-competitive regions and are expected to ramp up exports after a recovery phase from the Ukraine war. India will also be positioned at the lower end of the cost curve, given the fast pace of capacity expansion in the country.

In our alternative case scenario, in which we assume decarbonization will accelerate even further than in the base case scenario, Indian exports are expected to decrease due to the high-emission profile of the country’s supply. In this scenario, China and the Middle East are expected to be better positioned than India as low-emission steel suppliers by 2040.

Chinese steel exports will fall alongside capacity constraints

We expect Chinese steel exports will decline significantly in the long term as the country transitions from an investment-led growth model to a higher value- and services-led growth one.

Over the last five years, the Chinese government initiated production control to reduce emissions from the steel industry, and in line with the country’s decarbonization targets, we believe this trend will continue in the medium-to-long term. We expect that the output reduction in China will outweigh the expected reduction in the country’s domestic demand, leading to lower exports. This is also in line with the country’s strategy to focus on quality growth, meaning more higher-value-added manufacturing exports.

Additionally, steelmaking costs will move structurally higher in China from 2035 onwards due to the deployment of new technologies. For China, exports account for only a small share of total steel production. Hence, external carbon-related trade barriers such as CBAM are not enough to empower the industry’s transition. Policy will be the main driver, while the timeline of it remains a key uncertainty.

China’s share of global steel exports will fall in the long term, but the country will still be a major steel exporter, particularly in the APAC region. Accelerating economic development in Southeast Asia will support significant steel demand growth in the region, with China remaining its marginal supplier.

The Middle East will become a low-emission steel net exporter after 2040

CRU’s Steel Long Term Market Outlook projects that steel supply will become increasingly regionalized, with many regions achieving a higher level of self-sufficiency and domestic suppliers taking a larger share in demand growth. North America, the Middle East, and Southeast Asia are regions that are already investing in new capacity to meet future demand growth. Production growth is expected to outpace that of demand in some of these regions, reducing import demand.

The Middle East will change from a steel net importer to a net exporter after 2040, and part of the change in its net trade balance is via increasing low-emission steel to developed markets. The region is expected to focus on expanding domestic low-emission steel production by taking advantage of its abundant and low-cost natural gas supply. We expect local producers will also invest in green-hydrogen DRI-EAF steel production, which we believe will be one of the key steel decarbonization technologies in the future. Future global demand for low-emission steel is expected to increase and we expect Middle Eastern producers to capture a share of this market.

This Insight article was first published by CRU. To learn more about CRU’s services, visit www.crugroup.com.

US rig activity continues to hover near multi-year lows. Through Aug. 30, there were 583 drilling rigs operating in the US, two fewer than the week prior. Oil rigs held steady at 483, gas rigs fell by two to 95, and miscellaneous rigs were stable at five.

There were 48 fewer active US rigs last week compared to the same week last year, with 29 fewer oil rigs and 19 fewer gas rigs.

Canada rigs

Last week, there were 220 active Canadian drilling rigs, the highest count recorded since early March. The latest count is one higher than the week prior. Oil rigs held steady at 153 and gas rigs rose by one to 67.

There are currently 33 more Canadian rigs in operation than levels one year ago, with 38 more oil rigs and five fewer gas rigs.

International rig count

The international rig count is updated monthly. The total number of active rigs for the month of July fell to 934, 23 fewer than the June count and down by 27 from levels one year prior. This monthly count should be updated next week.

The Baker Hughes rig count is important to the steel industry because it is a leading indicator of demand for oil country tubular goods (OCTG), a key end market for steel sheet. A rotary rig rotates the drill pipe from the surface to either drill a new well or sidetrack an existing one. For a history of the US and Canadian rig counts, visit the rig count page on our website.

“The US economy, despite some near-term weakness I suggest in early 2025, is going to be strong,” Basu said on Tuesday, Aug. 27.

He said the reason is demographics. With the most populous generation, Millennials, approaching peak earning and spending years and they’re getting a lot of money from older generations.

“Based on those demographics, US demand for goods and services, especially from the consumer sector, can be quite strong,” Basu said.

“Macroeconomically, that should mean good things for steel, as well,” he added. “So, this infrastructure buildup is taking place. I think the commercial real estate markets, at least, the office work, will at some point stabilize and start to see more construction there.”

But Basu is more pessimistic about the short-term economy, suggesting a recession in early 2025.

One data point he noted was the Sahm Rule Recession Indicator, which signals the start of a recession when the three-month moving average of the national unemployment rate rises by 0.50 percentage points or more relative to the minimum of the 3MMAs of the previous 12 months.

The July jobs report showed unemployment rising 4.3%, triggering a Sahm reading of 0.53%.

“The Sahm rule has been a flawless predictor of recessions,” Basu said.

The economist also expressed concerns about the national debt and the future of social security and other social benefit programs.

“We’re completely abusing our nation’s finances,” Basu said.

He noted the trillions being spent through programs like the Infrastructure Investment and Jobs Act (IIJA) and the CHIPS act.

“If you look at federal government expenditures, you would think that we’re still in crisis, that Covid is still transpiring,” Basu said, noting that spending increased under both the Trump and Biden administrations.

“We spend now more on interest on the debt than we do on national defense,” he said.

The Federal Reserve has signaled that it would cut interest rates at its September meeting.

Basu said there could be two to three rate reductions this year, most likely in September and December.

“I don’t think there’ll be a rate cut in November – election time – but they could,” Basu said. “I want to say two rate cuts later this year, and they’ll cut every meeting through mid-year through the summer of next year. So, that’ll be another five or six rate cuts,” he predicted.

July now marks the ninth consecutive month the Barometer has indicated deteriorating business conditions. Since September 2022, the index has only indicated expansion once in November 2023. The index has averaged 42.9 across the first eight months of this year, and one year prior it was also in contraction territory at 48.7.

The MNI report accredits August’s marginal increase to improvements in the new orders, production, and supplier delivery subcomponents, noting that supplier deliveries climbed to a 22-month high. Two subcomponents saw declines from July to August, order backlogs and employment, with order backlogs receding to a four-month low.  

Respondents were asked two special questions this month:

Q: How are the upcoming November elections affecting your hiring plans?

A: Half of respondents indicated the elections will have no impact on hiring plans, followed by 30% saying it will have a minimal impact and other factors are more important. Just 17% responded the elections have them planning to hire less workers. The small remainder (3%) say they are hiring more permanent workers.

Q: With the potential for more adverse weather, are you putting into place more contingency plans?

A: Almost half responded they will not make any additional preparations. The remaining half was divided; 27% said they are putting more contingency plans in place, while 23% said this was unknown to their firm at this time.

View the full release here.

Canadian Prime Minister Justin Trudeau defended the move, stating: “We are transforming Canada’s automotive sector to be a global leader in building the vehicles of tomorrow, but actors like China have chosen to give themselves an unfair advantage in the global marketplace, compromising the security of our critical industries and displacing dedicated Canadian autos and metal workers.” Trudeau emphasized that Canada’s actions are a response to these unfair practices and are aimed at protecting Canadian workers and industries.

The tariffs on Chinese-made steel and aluminum are scheduled to take effect on Oct. 15, with a final list of affected products to be announced on Oct. 1. The surtax on Chinese-made EVs will increase to 106.1% on Oct. 1, up from the current 6.1%, according to Canadian media reports. Trudeau highlighted that these measures align with similar actions taken by the US and EU, aiming to address a global challenge collectively.

The Canadian Steel Producers Association (CSPA) and Aluminium Association of Canada welcomed the announcement, stating: “By taking this proactive approach of tariffs directed towards China, Canada is protecting our workers, families, and the communities that these vital industries support. Canada is also taking the important step of aligning with its USMCA trading partners, protecting fortress North America, and refusing to be a point of entry for unfairly traded and high carbon steel and aluminum imports.”

In response, China’s Commerce Ministry criticized Canada’s decision, accusing it of violating WTO rules and engaging in trade protectionism. A spokesperson from the Chinese Foreign Ministry urged Canada to correct its decision and stop politicizing trade issues, asserting that China will take necessary measures to protect the rights and interests of Chinese enterprises.

Additionally, Canada’s Deputy Prime Minister, Chrystia Freeland, announced a 30-day consultation period regarding potential tariffs on Chinese batteries, battery parts, semiconductors, critical minerals, metals, and solar panels. Freeland asserted that China’s state-directed policies of overcapacity and oversupply threaten Canada’s EV sector, which is crucial for future growth.

Capral and Tindo Solar to jointly establish new solar gigafactory

Capral, Australia’s largest extruder and distributor of aluminum products, recently entered into a supply deal with Tindo Solar amid plans for a $100 million “gigafactory”. The partnership is set to benefit Tindo Solar as it scales its production of solar panels to meet demand via an expansion of its Adelaide facility. Tindo Solar currently operates a 150-MW manufacturing facility at Mawson Lakes in Adelaide and, earlier this year, announced plans for a facility capable of producing at least 1 GW of premium quality panels per year. While the location of the gigafactory has yet to be identified, Tindo is currently scoping potential sites in NSW, Queensland, and Victoria. The proposed $100-million facility will create 250 jobs and be capable of producing 7,000 panels per day.

The gigafactory is being supported by the federal government’s Solar Sunshot program, which has allocated $1 billion for the solar PV manufacturing sector over the next decade. “This venture is more than just a significant step for Tindo; it represents a milestone for the entire Australian manufacturing sector, showcasing our potential to lead in sustainable energy solutions and build a more resilient local supply chain,” said Luke Hawkins, Capral’s divisional general manager of industrial and supply chain.

South32 reports wider losses

In other industry news, diversified miner South32 reported a net loss attributable to shareholders of $203 million for the fiscal year ending in June, up from a loss of $173 million the previous year. The increased loss is largely due to impairment expenses, including a $388 million post-tax charge for the Worsley alumina refinery in Australia and $248 million for the Cerro Matoso nickel operation in Colombia.

Despite these setbacks, Australia-based South32 reported a reduction in its net loss due to a $139 million after-tax gain from the sale of its Illawarra metallurgical coal business to Golden Energy and Resources and M Resources. CEO Graham Kerr noted that the sale simplifies the company’s portfolio, strengthens its balance sheet, and unlocks capital for investment in growth projects.

Looking ahead, South32 plans to increase its overall aluminum production by 17% and copper production by 15%, driven by higher grades at its Sierra Gorda mine in Chile. The company is also preparing for a phased restart of its Groote Eylandt Island manganese mine, which was damaged by Cyclone Megan earlier in the year. The mine is expected to produce 1 million tons of ore this financial year, with a target of 3.2 million tons by fiscal 2026.

To learn more about CRU’s services, visit www.crugroup.com.

Also, a big shoutout to everyone at SMU and at CRU who made this event possible. It’s no understatement to say that we have a fantastic team. They kept everything running smoothly – from the registration booths and the AV to the FOAM-O coffee (iykyk).

If I have one regret, it’s that I’m so busy at Summit that I don’t have time to catch up with more of you personally. (Or not for long if I do.) But I look forward to continuing the conversation in the SMU newsletter, in our upcoming Community Chats webinars, and next year in Atlanta.

Speaking of next year, I wanted to draw your attention back to the results of the snap polls we conducted on Day 1 of Steel Summit. We asked folks to predict where hot-rolled (HR) coil prices and demand would be a year from now. We also asked about Nippon Steel’s roughly $15-billion acquisition of U.S. Steel and this year’s presidential election.

Snap poll: HR in August 2025

We’ve been writing for a lot of this year about how prices were falling (or not going up as much as expected), how inventories have been high, how there are concerns about demand, and how sentiment has been a little lackluster. So I was surprised, to be honest, at how bullish people were about 2025.

SMU’s hot-rolled (HR) coil price had been in the $600s per short ton (st) from mid-June until just before Steel Summit. But during a snap poll at the event, nearly half predicted that HR would be $700-799/st in August 2025.

Another 33% were even more bullish; they said prices would be $800-899/st this time next year. Very few said they would be below $600/st or above $900/st.

We haven’t really seen “mini-cycles” since the pandemic. Remember the “before times” – that distant galaxy called 2019. Perhaps we’ll see mini-cycles again but at a somewhat higher level?

Snap poll: 2025 Demand

There was also a lot of optimism that demand would be better next year. Two-thirds of respondents said that demand would be better in August 2025. Only 10% thought demand would be lower.

Why might that be? Maybe this: There was a lot of talk at the conference about how we could see more restrictions on imports next year – whether from tariffs on downstream products, a carbon border tax of some sort, actions against transshipment, or AD/CVD cases.

Just a few examples: There was chatter at the conference about a potential trade action against coated sheet from Vietnam. On the long products side, there was talk of potential trade cases on rebar from Algeria and Egypt. And downstream, Barry Zekelman mentioned his frustrations with pipe from Oman and conduit from Mexico.

There was also some optimism that infrastructure spending and other federal stimulus could have more of an impact next year. Is it finally enough to move the needle on demand?

Snap poll: Nippon acquisition of U.S. Steel

We, in addition, asked whether Nippon Steel’s $15-billion acquisition of U.S. Steel would close. Roughly two-thirds of you said that it would.

That’s a huge change from earlier this year when the deal became a political football with Cleveland-Cliffs and the United Steelworkers (USW) union vehemently opposed to the deal.

And keep in mind that we took our poll before Nippon Steel announced that it would invest “no less than $1 billion” in U.S. Steel’s Mon Valley Works near Pittsburgh and $500 million at its Gary Works in northwest Indiana. Both are represented by the United Steel Workers (USW) union.

That’s notable because you could make the case that a lot of the bad blood between U.S. Steel management and the USW stems from a decision in April 2021 to shift a planned $1-billion investment in Mon Valley to its non-union Big River Steel mill in Arkansas.

The USW still opposes the deal. And I think it’s risky to understate the union’s influence in an election year – especially when votes in western Pennsylvania, a swing area of a swing state, could make the difference between winning or losing the White House.

But as several speakers at Summit said, politics aside, the transaction just makes sense. It’s the kind of knowledge and information transfer that the US should support – in this case, from Japan, one of our closest allies, to the States.

Snap poll: Trump vs. Harris

I was a little concerned ahead of Summit that things would get heated this year over politics, especially with a very close (according to current polls) election between former President Donald Trump and current Vice President Kamala Harris.

Most folks who attended the Summit think Trump will win.

Michael Smerconish did a good job of setting the tone for the conference in his keynote address. He encouraged everyone to get out of their bubbles, especially the social media ones. And to consider other points respectfully – which I think we mostly did. (Ha, maybe to the chagrin of some who were hoping for more sparks.)

While the election matters greatly on a lot of issues, one theme that came across again and again was that one of the few subjects on which both parties agree is trade policy, especially as it relates to steel.

Trade experts and other speakers also noted that both parties, along with much of the rest of the world, has woken up to the problem of excess capacity in China – with Canada recently joining those ranks.

Analysts and policy experts also pointed out that both the US and Europe want to account for imports coming in from countries whose steelmakers emit more carbon. Even if they’re still pretty far apart on the details of how to do that.

If there are differences among Republicans and Democrats, the consensus seemed to be that a second Trump administration might take a harder line on allies like Europe and Mexico. But, as several speakers noted, former President Obama first cracked down on steel imports with a wave of AD/CVD cases while he was in office.

President Trump more or less continued that effort, albeit through Section 232. It was perhaps not the tool designed for the job, but one that got it done. (Sort of like hammering a nail with a shovel.) And President Biden has largely continued Trump’s policies. The assumption seems to be that a Harris administration would mostly follow in Biden’s steps as it relates to steel.

Steel might be lucky in that regard. Our panel on electric vehicles (EVs) noted that the election was almost an existential issue for that sector. Whether you drive (or aspire to drive) EVs or not, they said, is a pretty good proxy for party affiliation.

I was surprised to hear that. But then again, I was surprised when Smerconish talked about a Whole Foods/Cracker Barrel divide. I didn’t realize that existed, which is apparently proof that I’m from a swing state. (Here we go, Steelers!)

Into the woods

Frankly, it’s hard to pull just a few key themes from such a big event spanning three days with nearly 40 speakers. And if you’re having trouble sorting it all out, just remember Zekelman’s words of wisdom at the end of his fireside chat: “We’re all morons.”

True, that. It’s important to be humble – whether that’s in assessing markets or in life. And with that, my friends, I’m signing off for a long weekend of camping/glamping with family and friends.

PS – We will keep our website humming on Friday. But there will be no Sunday newsletter this week in observance of Labor Day. I and the rest of the SMU team look forward to catching up with yinz again on Tuesday, when we’ll send our next newsletter.

Steel Summit 2025

Some of you have asked me when the next SMU Steel Summit will be. Mark your calendars for Mon-Weds, Aug. 25-27, 2025. It’s sure to be another informative and entertaining event.

The panic in iron ore took Turkish scrap futures down with it, but then Turkish scrap rebounded alongside ore. What is even more interesting is Turkish scrap continues to bounce off its $355 support level as indicated by the yellow dashed line.

Rolling 2nd month LME Turkish scrap future

Over the past few years, financial market participants have increased their footprint in HRC futures. As a result, Midwest HRC futures can be heavily influenced at times by developments on the global ferrous or macroeconomic front. For instance, HR futures trading volume ground to a halt through the first seven trading sessions of August as the summer doldrums arrived in full force. The news out of China and panicked-selling in iron ore spilled into the Midwest futures market. Trading volume exploded as futures tanked. 

September CME HRC future $/st w aggregate curve volume & 5-day avg.

This chart shows the sell-off during the week of Aug. 12 with the October future leading the group lower down $64 week over week.

CME hot-rolled coil futures curve $/st

Just like in ore and Turkish scrap, Midwest HRC futures said “this aggression will not stand” and rebounded on heavy volume, essentially erasing all of the previous month’s declines. Despite the news and subsequent moves in iron ore, every month from August 2024 to June 2025 saw no more than a $13 gain or a $13 loss over the two-week period. If you were one of the lucky ones to leave on vacation on Aug. 9 and return on Aug. 23, you would look at the curve and think, I am happy to have chosen those two weeks as I didn’t miss out on anything! 

CME hot-rolled coil futures curve $/st

Let’s get technical. If you liked the double-bottom, you are gonna love the triple-bottom…

On the one hand, we have the comments from Baowu to add to the long list of bearish factors. However, if you are a contrarian or bullish, or a contrarian bull, or even a bullish contrarian, then you will be feeling “pretty good” about the chart of the rolling 2nd month Midwest HRC future.

The chart has formed a “triple-bottom,” having bounced off the $650-660 area in June, July, and August. A triple-bottom pattern is characterized as a trend-reversal pattern. In addition, the future traded above and has remained above its seven-month downtrend in blue. The next test sits at the $770 resistance level indicated by the dotted white line.

“Remember, one man’s ceiling is another man’s floor,” or previous support that is broken below becomes resistance when the price rebounds. If the rolling 2nd month can break above $770, then perhaps we will see another squeeze similar to the four sharp rallies experienced in HRC futures since the start of 2023.

Rolling 2nd month CME HRC future $/st

Disclaimer: The content of this article is for informational purposes only. The views in this article do not represent financial services or advice. Any opinion expressed by Mr. Feldstein should not be treated as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Views and forecasts expressed are as of date indicated, are subject to change without notice, may not come to be and do not represent a recommendation or offer of any particular security, strategy or investment. Strategies mentioned may not be suitable for you. You must make an independent decision regarding investments or strategies mentioned in this article. It is recommended you consider your own particular circumstances and seek the advice from a financial professional before taking action in financial markets.

“That Wednesday Lunch Club couldn’t fill a high top for two today,” said Michael Smerconish, Sirius XM radio and CNN television host.

Speaking this week at Steel Summit 2024 in Atlanta, Smerconish addressed today’s polarization, as well as how we can address it.

“What’s gone wrong? A number of things, including the fact that people who do what I do for a living on radio and television, media personalities, now have outsized influence over primary voters, and they have shifted the debate to the extremes,” Smerconish told the crowd. “A polarized media is great for ratings, but bad for the country.”

He cited the late Sen. John McCain, who spoke about the increasing inability of Congress members to compromise with one another for the good of the country. At the end of his tenure, McCain urged people to “Stop listening to the bombastic loudmouths on the radio and television and the Internet. To hell with them. They don’t want anything done for the public good. Our incapacity is their livelihood.”

Another factor Smerconish noted is that people have begun to self-sort and are becoming less likely to interact with people who believe differently, have different lifestyles, or belong to another social class. Social media has made it that much easier to stay in a bubble of like-minded thinking while isolating us from our communities. Fewer people are active in their places of worship, bowling leagues, Elks clubs, or subscribe to their local newspapers, to name a few.

One way to reestablish community engagement is what Smerconish calls “The Mingle Project,” which is to engage with your neighbors and communities face to face.

Asked by an audience member how our political leaders can encourage mingling, Smerconish warned, “Don’t wait for those that I’m most critical of to solve this problem, because it suits their objective.”

“They’re not going to fix the problem. The problem gets fixed when we realize what’s driving it and to start to take small steps in our own communities to push back,” he said.

Current lead time averages are a few days longer than levels seen a month ago but remain near historical lows for both sheet and plate products.

Table 1 below summarizes current lead times and recent trends.

Our lead time ranges’ upper and lower limits are almost identical to the mid-August limits, with only two changes seen this week. The shortest lead time in our Galvalume range has increased from six weeks to seven weeks, and the upper range for plate lead times has declined from six weeks to five weeks.

Survey results

Just over half (51%) of respondents this week remarked that current mill production times were within typical levels. The remainder said lead times were shorter than normal (41%), while 8% commented they were slightly longer than normal.

We also polled buyers on where they think lead times would be two months down the road. Most respondents believe lead times will be flat through October (60% this week vs. 66% in our prior survey). Only 24% forecast production times will extend further (down from 29% previously). The percentage of buyers expecting lead times to shrink increased (17% this week compared to 5% in mid-August).

Here’s what respondents are saying about lead times:

“Mills will try to manipulate lead times with outages, but they can easily make up the downtime by running at 80% plus capacity the days they are operational.”

“They can’t get much shorter.”

“Flattening – after extending a little bit more in the near future.”

“Even with the planned outages, we are expecting pretty weak demand in Q4 at the mill level.”

Figure 1 below tracks lead times for each product over the past two years.

3MMA lead times

To better highlight trends, we can view lead time data on a three-month moving average (3MMA) basis to smooth out the variability in our biweekly readings. Through the end of August, 3MMA lead times were steady to slightly down for all sheet and plate products, remaining near lows not seen since late 2023. This downward trend has been evident for the last six months.  

The hot rolled 3MMA is now at 4.80 weeks, cold rolled at 6.67 weeks, galvanized at 6.94 weeks, Galvalume at 6.86 weeks, and plate at 4.64 weeks.

Figure 2 highlights lead time movements across the past four years.

Note: These lead times are based on the average from manufacturers and steel service centers participating in this week’s SMU market trends analysis survey. SMU measures lead times as the time it takes from when an order is placed with the mill to when it is processed and ready for shipping, not including delivery time to the buyer. Our lead times do not predict what any individual may get from any specific mill supplier. Look to your mill rep for actual lead times. To see an interactive history of our steel mill lead times data, visit our website. If you’d like to participate in our survey, contact us at info@steelmarketupdate.com.

Through our latest market survey results, the SMU Current Steel Buyers’ Sentiment Index jumped 10 points from two weeks prior, now back in territory last seen in early June. Current Sentiment has increased each of our last two surveys following late July’s multi-year low. Future Buyers Sentiment surged 17 points from mid-August, moving from a 14-month low to a nine-month high.

What could be driving this recovery – is the market genuinely improving? We advise caution, attributing the surge to increased optimism following our annual SMU Steel Summit Conference. Historically, our Steel Buyers’ Sentiment Indices have shown moderate gains in the weeks after each Summit, with upticks in market enthusiasm observed in seven of the past 10 years following the event.

SMU’s Current Buyers’ Sentiment Index rose to +48 this week, recovering 10 points from two weeks prior (Figure 1). Recall that Current Sentiment had fallen to +34 in both the first and last week of July, which were the lowest readings recorded since August 2020. Year to date (YTD), Current Sentiment has averaged +53 across the first eight months of 2024, significantly lower than the 2023 YTD average of +69. This time last year Current Sentiment was +55.

SMU’s Future Buyers’ Sentiment Index measures buyers’ feelings about business conditions three to six months down the road. This index jumped 17 points to +72 this week. This is now the highest Future Sentiment reading seen since November 2023. Recall that just two weeks prior it fell to the lowest value seen in over a year (Figure 2). Future Sentiment has averaged +64 since the beginning of 2024, down just two points from the same period of 2023. Future Sentiment was +66 the same week one year ago.

Measured as a three-month moving average, Buyers’ Sentiment moved in differing directions this week. The Current Sentiment 3MMA eased yet again this week, now down to a four-year low of +40.09. The Future Sentiment 3MMA changed pace, increasing to +64.34 following mid-August’s five-month low (Figure 3).

What SMU survey respondents had to say:

“We seem to buy wisely and competitively. We’ll be OK.”

“Positive – solid customer base.”

“Election years always slow us down, so after November we should see an increase in our market.”

“Our business continues to be pretty solid, but we continue to capture market share, which helps.”

About the SMU Steel Buyers’ Sentiment Index

The SMU Steel Buyers Sentiment Index measures the attitude of buyers and sellers of flat-rolled steel products in North America. It is a proprietary product developed by Steel Market Update for the North American steel industry. Tracking steel buyers’ sentiment is helpful in predicting their future behavior. A link to our methodology is here. If you would like to participate in our survey, please contact us at info@steelmarketupdate.com.

SMU’s check of the market on Tuesday, Aug. 27, put domestic HR tags at $700 per short ton (st) on average, up $25/st from last week. (Note that stateside hot band, while up $65/st from a 20-month low, remains $145/st below a recent high of $845/st in early April.)

Domestic HR is now theoretically almost 3% more expensive than imported material. Prices were 0.3% cheaper last week, and nearly 12% cheaper just last month.

In dollar-per-ton terms, US HR is now, on average, $19/st more expensive than offshore product (see Figure 1). That compares to $2/st cheaper on average last week, and is a $91/st shift from just a month ago when US tags were roughly $72/st cheaper than offshore material.

The charts below compare HR prices in the US, Germany, Italy, and Asia. The left-hand side highlights prices over the last two years. The right-hand side zooms in to show more recent trends.

Methodology

This is how SMU calculates the theoretical spread between domestic HR coil prices (FOB domestic mills) and foreign HR coil prices (delivered to US ports): We compare SMU’s US HR coil weekly index to the CRU HR coil weekly indices for Germany, Italy, and East and Southeast Asian ports. This is only a theoretical calculation. Import costs can vary greatly, influencing the true market spread.

We add $90/st to all foreign prices as a rough means of accounting for freight costs, handling, and trader margin. This gives us an approximate CIF US ports price to compare to the SMU domestic HR coil price. Buyers should use our $90/st figure as a benchmark and adjust up or down based on their own shipping and handling costs. If you import steel and want to share your thoughts on these costs, please get in touch with the author at david@steelmarketupdate.com.

Asian HRC (East and Southeast Asian ports)

As of Thursday, Aug. 29, the CRU Asian HRC price was $434/st, up $5/st vs. the week prior. Adding a 25% tariff and $90/st in estimated import costs, the delivered price of Asian HRC to the US is approximately $632/st. As noted above, the latest SMU HR price is $700/st on average.

The result: US-produced HRC is theoretically $68/st more expensive than steel imported from Asia. That’s up $19/st vs. last week as stateside prices increased at a sharper rate than Asian tags. But it’s still a far cry from late December when US HR was $281/st more expensive than Asian product.

Italian HRC

Italian HR coil prices were flat at $603/st this week. After adding import costs, the delivered price of Italian HR coil is, in theory, $693/st.

That means domestic HR coil is theoretically $7/st more expensive than imports from Italy. That is up $23/st from last week. Just five months ago, US HR was $297/st more expensive than Italian hot band.

German HRC

CRU’s German HR price moved to $628/st, which is $4/st higher than last week. After adding import costs, the delivered price of German HR coil is, in theory, $718/st.

The result: Domestic HR is theoretically $18/st cheaper than coil imported from Germany, up from a $39/st discount last week. At points in 2023, in contrast, US HR was as much as $265/st more expensive than imported German hot band.

Notes: Freight is important when deciding whether to import foreign steel or buy from a domestic mill. Domestic prices are referenced as FOB, the producing mill, while foreign prices are CIF, the port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight, from either a domestic mill or from the port, can dramatically impact the competitiveness of both domestic and foreign steel. It’s also important to factor in lead times. In most markets, domestic steel will deliver more quickly than foreign steel. Effective Jan. 1, 2022, Section 232 tariffs no longer apply to most imports from the European Union. It has been replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff. SMU still includes the 25% Section 232 tariff on prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.

Hybar’s initial plan, announced in November 2022, called for constructing two rebar mills. That plan has since grown. Stickler said this week the new goal is for “three or four bar mills,” and then possibly a flat-rolled steel mill.

Stickler also revealed that an important announcement is forthcoming in the coming week: A Fortune 300 company has agreed to take a 20% stake in Hybar, and that will allow the company to accelerate its growth and expansion plans.

Tailwinds in the rebar market

Hybar’s first mill, under construction in Osceola, Ark., is on track to start up 10 months from now. When it does, Stickler believes it will be met by some favorable tailwinds in an expanding market.

He cited nearshoring in manufacturing and government infrastructure spending as solid drivers of rebar demand going forward.

While there are some questions about a potential oversupply of rebar in the US, Stickler believes older mills will have to shut down. Some mills are 50+ years old and will simply be unable to compete with a brand new mill’s cutting-edge technology, he pointed out.

Hybar plans now to establish three or four rebar mills in the US, and then potentially a flat-rolled steel mill. A flat rolled mill is dependent on the expiration of the non-compete agreement Stickler signed with U.S. Steel after it purchased Big River Steel (BRS).

The location of Hybar’s second mill is still undecided, with potential sites identified in South Carolina, Georgia, Idaho, and Washington.

Running lean and staying focused

Stickler runs his companies as lean as possible.

He said Hybar is going sell the 630,000 tons of rebar its first mill produces annually with just two sales professionals. But “if we keep going the way we’re going, maybe I don’t need any” salespeople, he remarked.

The company previously announced that it had already pre-sold 25% of its future production. And another big deal is coming soon, as Stickler said on Tuesday that, “Within a couple of weeks, we’ll have 50%” sold.

He said the big buyer had previously sourced rebar from overseas suppliers, “but they had enough of that nonsense” and so will be sourcing from Hybar once its mill comes online.

This clearly shows that Hybar will be able to displace imports with its product, according to Stickler.

Stickler’s management philosophy involves transparency, keeping bureaucracy to a minimum, and creating a culture of continuous improvement.

He said his “goal is always to have the highest paid steelworkers in the world,” and believes he can achieve this by having everyone focused on profitability and productivity. With profitability as the only key performance indicator (KPI), “Everyone is focused on driving profits,” he said.

Mill operators, salespeople, security and janitorial staff, executives, every employee’s weekly bonus is based on that KPI to show that “we’re all tied together,” commented Stickler.

Not a believer in green steel premiums

Stickler remains unconvinced that the steel industry will be able to achieve a “green steel premium.”

When he helped set up the first BRS plant in Arkansas, the mill achieved LEED certification. People weren’t interested in paying more because it was LEED certified, he said, but some customers were willing to buy from them just because it was environmentally friendly.

“We did not achieve a green premium,” he remarked. “I’m not so sure that a green premium that everybody talks about is real. Environmental sustainability is a tiebreaker, not a game changer.”

“Maybe” they’ll be able to get $20-35/ton more from buyers for the most environmentally sustainable rebar, “But I certainly didn’t raise a billion dollars for our solar steel port and steel mill expecting a green premium,” he added.

Negotiation rates by product

As seen in Figure 2, negotiation rates remain relatively high for both sheet and plate products, ranging from 71-88%.

The negotiation rate for hot-rolled coil increased four percentage points from mid-August to 71% this week, now down to the lowest rate seen in five months. Buyers of cold-rolled products reported a negotiation rate of 71%, an eight-percentage point recovery from our prior survey. The negotiation rate on galvanized products inched up three percentage points to a one-month high of 83%. Galvalume rates also ticked higher to 82%. Negotiation rates on plate products continue to be the strongest, easing one percentage point from mid-August to 88%.

Here’s what some survey respondents had to say:

“Deals can still be made but require significant volume. However, those deals are still $50-75 per ton higher than deals offered just 30 days ago.”

“Big tons will get you a deal.”

“On large orders- 2,000 tons or more.”

“Yes, with volume.”

“Very selectively.”

Note: SMU surveys active steel buyers every other week to gauge their steel suppliers’ willingness to negotiate new order prices. The results reflect current steel demand and changing spot pricing trends. Visit our website to see an interactive history of our steel mill negotiations data.

Lindqvist had previously announced he is leaving the company for a board career. He will remain in his current position until Oct. 27.

Sjöström has been head of SSAB Special Steels since 2019. He worked to develop and grow the company’s business for special steels and oversaw the “green transformation” of SSAB’s steelworks in Oxelösund, Sweden.

“During the past years, I have worked closely with Martin Lindqvist, and I look forward to continuing to deliver on the company’s long-term strategy together with all our skilled employees,” Sjöström said in a statement on Thursday.

Sjöström has also spoken at SMU Steel Summit and appeared on an SMU Community Chat in March 2022.

Integrity, honesty, trust, open communication, and teamwork, these are just some of the hallmarks driving Nucor’s culture. Right up there with those is also safety.

“And that’s our most important thing, safety, and how we approach that and drive safe processes in everything we do,” Needham said.

In a wide-ranging talk, Needham spoke extensively with Bell about Nucor’s weekly Consumer Spot Price (CSP) for hot-rolled coil, introduced in April.

Nucor CSP origin, reaction

Needham said if you’re in the flat-rolled business, you understand the word “volatility” very well.

He noted that the velocity of that volatility in pricing has seemed to increase in the last few years.

Thinking about the underlying forces behind that, “we believe that it’s really a disconnect between underlying demand and order practices,” Needham said.

“And so we introduced the CSP several months ago to provide real-time, relevant, transparent pricing signals to our customers around hot-rolled coils,” he added.

Regarding how the price is faring so far, Needham commented, “I think it’s still too early.”

“I think most of our customers understand why we’re doing it, but they’re waiting to see is it going to work,” he said. “And I think we’re in the same boat there.”

CSP nuts and bolts

Needham said what determines the CSP is market dynamics, and that means evaluating key market indicators.

“So that’s going to be customer inventories, it’s going to be order books, it’s going to be import activity, and then also feedback from our customers,” Needham said. “So all of those things are considerations.”

He stressed that “it’s not just about emotions or what we think it is, there’s underlying data behind it.”

“And we’re partnering with our customers to think about: How does that help impact this volatility?” Needham said.

Six degrees…

Bell asked Needham how Leon Topalian, chair, president, and Nucor CEO, was able to select such a widely respected leadership team in the industry.

Needham said it comes down to being given “a common mission and a common vision” of where they are going as a company.

Whether it’s investing in cutting-edge, nuclear technology, data systems, or in garage door firms, the common vision gives “the opportunity to execute together as a team.”

Speaking to that, the company now has 32,000 employees, which it terms “teammates.”

“With the low turnover, we grow up together, we’re brothers, we’re sisters, we’re family,” Needham said.

Some may remember the pop culture idea of “Six Degrees of Kevin Bacon” where you try to connect any actor to fellow thespian Kevin Bacon in the shortest number possible.

Needham quipped that he was at a meeting a few years ago with a number of other Nucor employees.

Looking around, he realized that he knew everyone in the room, “and probably most of them I had worked with somewhere on my journey.”

Recounting this to someone else at the meeting, the other employee turned to him and said, “You’re like Kevin Bacon.”

Speaking Monday at Steel Summit 2024 in Atlanta this week, Schneider said the company pays close attention to the conversion costs of turning scrap into hot-rolled steel.

“As many of you know, the price of scrap is, in some cases, higher than the price of hot band,” he said.

When asked about conversion costs, whether they may be in the $100 range or, perhaps $200, Schneider declined to specify a figure, instead jokingly saying it was “somewhere in that range.”

“Over the last 30 years that we’ve been operating, I will tell you that our conversion cost hasn’t drifted more than 25%, and that’s with the different inflationary pressures that we see.”

One cost advantage to EAFs is that they can be turned on and off.

“A blast furnace has to be — they’re on or they’re costing a lot of money,” he said. Blast furnaces may make iron cost effectively, but it also means a high price tag as the supply chain has a lot of carbon and a lot of energy, he noted.

But he doesn’t see an end to blast furnaces any time soon.

“EAFs are a great technology, and as you incorporate iron making in that for the flat-rolled side, that becomes the bridge,” Schneider said. “Worldwide, we’re starting to see projects that are doing just that. Think of the best of what you can get from liquid metal, from iron, what you can do with scrap, and how efficiently you can do that.

“I don’t see a situation where the furnace will start shutting down,” he said. “It would have to be pretty dire in that situation. And that’s where the conversion cost is so important, to be the last guys that stay in the fight.”

Value in copper

Copper content can be a challenge when handling obsolete scrap. But there are ways for ferrous recyclers to extract more value from the red metal.

“As we talk about the quality of copper, it becomes the bad guy,” Schneider said. “It’s not good for flat-rolled steel.”

One key is to make sure the copper level is appropriate for the end user.

“There’s value in all those things that we take out of that supply chain, from zorba to twitch, these things have different metals in them that we find of value.”

To that end, SDI has been investing in technology in shredding yards.

In SDI’s most recent earnings call in July, Schneider said the metals recycling team is “partnering even more closely with both our steel and aluminum teams to expand scrap separation capabilities through both process and technology solutions. This will help mitigate potential prime ferrous scrap supply issues in the future. It will also provide us with a significant advantage to materially increase the recycled content in our aluminum flat rolled products and increase our earning potential.”

“The technology we have, we’re deploying in more and more of our scrap operations. But it’s just as important that when shred shows up at the mill, we know when to use it,” he said.

For example, he said, if you’re shooting for 0.2 carbon, it’s great. If you get a 0.25, it’s bad. But if you get a 0.15 and the customer doesn’t really need that, you wasted your money, Schneider described.

“The tools the mills are developing specifically are known of how to track industrial how to logistically handle it, when to put into furnace.”

Farm-to-table

Schneider said the bottom line to recycling is that it has a return.

“We’re not doing this for political reasons or for virtue,” he said. “We’re doing it because we have a great footprint.”

SDI uses about 85% scrap in flat-rolled steel, and more in other products.

“I describe this as the farm-to-table of steel, where we use local resources, local people and have regional customers,” Schneider said.

SDI said it has hit its 2025 decarbonization goals. Now it’s looking to 2030.

“We believe these are return items,” Schneider said. “We’re going to make money on these projects. This isn’t a charity. It’s just another way to do business.”

Editor’s note: This column appeared first in Recycled Metals Update (RMU), SMU’s new sister publication. RMU is devoted entirely to the ferrous and nonferrous recycled metals markets. If you’d like to learn more, visit RMU’s homepage and register for a free 30-day trial.

“Nippon Steel believes that a transformed Mon Valley Works will expand U.S. Steel’s ability to serve a broader range of markets and customers, create additional high-grade steel capabilities, strengthen the competitive positioning of Mon Valley’s blast furnace operations, and secure American steel supply,” it said in a statement.

Additionally, the Tokyo-based company said it will revamp blast furnace #14 at the USS Gary Works in northwest Indiana. The $300-million investment will extend the facility’s operational life by 20 years, Nippon said. That furnace has a daily ironmaking capacity of 7,450 short tons, according to SMU’s Blast Furnace Status chart.

Nippon also said it sees “numerous opportunities for technology transfer to U.S. Steel following the closing of the transaction to reduce environmental footprint and extend the longevity of the USW-represented facilities.”

It noted that these investments are conditional on the deal’s closing and regulatory approvals. Further engineering studies will determine the design and specifications of those investments.

“The investments will require significant expenditures beyond calendar year 2026 and are incremental to” the previously announced $1.4-billion capital commitment for maintenance and capex projects at union-represented facilities, Nippon said.

USW responds

The investment promises are assumed to be a part of Nippon’s courting of the United Steelworkers (USW) union, which has so far been unsupportive of the transaction.

If you recall, in 2019, U.S. Steel announced a $1.2-billion investment project for its Mon Valley plant. It announced a few months later it was acquiring a stake in Big River Steel. Then, in 2021, it upset USW leaders and members with the surprise announcement it was canceling the Mon Valley investment. Again, just a few months later, USS then announced it would invest $3 billion to build a new EAF steel mill.

So, having already been burned by USS investment promises, the union was quick to respond to Wednesday’s announcement. It said Nippon was only paying lip service to its concerns while avoiding actual input from union leaders and members.

“Nippon talks a big game, but at the end of the day, a press release is not a contract,” USW said in a message to members.

It reminded members that U.S. Steel, under David Burritt’s leadership, broke its previous commitment to invest at Mon Valley and chose instead to buy Big River Steel.

“We can’t trust in what USS and Nippon are telling us,” the USW stated.

Comments from Steel Summit

Timna Tanners, managing director of Wolfe Research, said this week that the union’s opposition to the deal makes “perfect sense” right now.

“This is hardline negotiation tactics,” she said onstage at the 2024 SMU Steel Summit in Atlanta. “They need to exercise their play into the election and get the most maximum possible benefits out of Nippon.”

The tactics are “aggressive,” but the union seems to already be softening its position, she noted. She believes opposition to the deal just doesn’t make sense beyond November.

After Biden and Trump came out with comments against the merger earlier this year, Tanners put the deal’s probability of closing at less than 50%. However, she raised the probability after Harris became the Democratic candidate, noting that the presidential contender still has not taken a position on the USS/Nippon deal.

Wolfe Research’s “view is that it’s more likely than not to close. So we put a greater than 50% probability,” Tanners said on Monday.

But this comes as fall maintenance outages approach that could take more than 1 million short tons of capacity out of the market. We’re also potentially looking at some trade actions that could further limit supply.

In our outlook panel yesterday, Citi’s Alex Hacking warned that the combination of weak demand and overcapacity in China could spell trouble for the world.

Tristan Gresser of BNP discussed the likelihood of some of those trade actions. And Timna Tanners of Wolfe Research said that new capacity continues to come into the market – not only when it comes to hot-rolled coil (think Sheet Storm) but also when it comes to new galvanizing capacity (think Galv Galore). And this might shrink the premium between HR base prices and tandem products.

But it’s not all doom and gloom

Most of you predicted during the conference’s opening poll that steel prices would be higher next year. You also think that demand will be better next year, with an expected boost of at least 5% over this year.

Michael Smerconish delivered a compelling opening keynote, The Mingle Project, that was both a diagnosis and a prescription of our divided political landscape.

Barry Schneider, Steel Dynamics president and COO rounded out day one, highlighting a vast array of developments in flat-rolled steel and Aluminum Dynamics. We also talked about his days as a guitar player in a rock and roll band playing gigs at Mr. Peabody’s Pub in Cleveland.

Hybar CEO Dave Sticker sat down with SMU Managing Editor Michael Cowden to talk about the latest developments at the new player in the rebar market, the outlook for rebar and construction, and the long-term outlook for scrap. With a plan to build another three or four rebar mills, he was rather bullish on all of them.

Barry Zekelman was again a crowd favorite, weighing in on trade dynamics and policy, mill consolidation, and the potential impact of the presidential election on steel.

And while we heard from Dr. Anirban Basu on his latest economic outlook with a Clint Eastwood themed talk, we also learned about the low Uber rider rating he has collected from his “off-putting” economic questions during ride-share trips.

We also had several great panels covering trade, flat-rolled end markets, and recycled metals. And day two closed with an exclusive interview with Alan Kestenbaum, executive chairman and CEO of Stelco, joining us fresh off the announcement of Cleveland-Cliffs’ acquisition of the iconic Canadian flat-rolled steelmaker.

Big finish to Steel Summit tomorrow

Here’s the program for the final day of SMU’s Steel Summit on Wednesday, Aug. 28, at the Georgia International Convention Center in Atlanta:

7:30 a.m. – Doors open at GICC. All-day beverages sponsored by Felux and continental breakfast sponsored by Fifth Third Bank

8:00-8:30 a.m. – Lobby Stage: The Artful Deal – M&A, Lending and the Future of Your Steel Business

• Andrew Pappas, Managing Director, BMO Bank, N.A.
• Vincent Pappalardo, Managing Director & Principal, Brown Gibbons Lang & Co.

8:30-8:45 a.m. – Opening Remarks by David Schollaert, Senior Analyst/Editor, Steel Market Update

8:45-9:30 a.m. – The Future of the Auto Industry: EVs and the Shape of Things to Come

• Alan Amici, President & CEO, Center for Automotive Research (CAR Group)
• Dan Bowerson, VP Energy and Environment, Alliance for Automotive Innovation
• Dean Kanelos, Market Development and Product Applications Manager, Nucor
• Michael Davenport, Executive Director and President, Auto/Steel Partnership

9:30-10:15 a.m. – Fireside Chat with Dan Needham, Executive VP Commercial, Nucor

10:15-11:00 a.m. – It’s Not Easy Being Green: The Challenges and Opportunities of Decarbonization

• Brenda Petrilena, Director – Global Decarbonization and Program Management, U.S. Steel
• Kyle Nicholas, VP Business Development, Westinghouse
• Don Stevenson, VP of Carbon Management & Conversion, GTI Energy
• Joerg Brinckmann, VP Business Development Coke and Iron, SMS Group

11:00-11:20 a.m. – Networking Break sponsored by Priefert Steel

11:20-12:05 a.m. – Spotlight on Service Centers: Managing Market Cycles and Inventories in Unpredictable Times

• Pam Heglund, CEO, Mill Steel Company
• Geoff Gilmore, President and CEO, Worthington Steel
• Thad Solomon, President and CEO, Steel Technologies

12:05-1:20 p.m. – Dr. Alan Beaulieu, President and Principal, ITR Economics

1:20-1:30 p.m. – Final Thoughts by Michael Cowden, Managing Editor of Steel Market Update

1:30-2:30 p.m. – Lunch sponsored by Priefert Steel

Close of Conference

At the same time, higher inventories, concerns about demand, and a so-so outlook for the September scrap market are partially offsetting them.

SMU’s HR coil price now stands at $700 per short ton (st) on average, up $25/ton from last week. Steady gains over the past month have led to a reversal from late July, when the low end of our range fell to $600/st.

Prices for cold-rolled (CR) coil came in at $920/st on average, up $5/st from last week. Prices for galvanized and Galvalume were unchanged, and plate prices were also flat.

Our momentum indicators for sheet are pointing higher for a third consecutive week. Our momentum indicator for plate, in contrast, remains at lower.

Hot-rolled coil

The SMU price range is $670-730/st, averaging $700/st FOB mill, east of the Rockies. The lower end of our range is up $20/st w/w and the top end is up $30/st. Our overall average is up $25/st. Our price momentum indicator for HR remains at higher, meaning we expect prices to increase over the next 30 days.

Hot rolled lead times range from 3-6 weeks, averaging 4.9 weeks as of our Aug. 14 market survey.

Cold-rolled coil

The SMU price range is $880–960/st, averaging $920/st FOB mill, east of the Rockies. The lower end of our range is unchanged, while the top end is up $10/st w/w. Our overall average is up $5/st w/w. Our price momentum indicator for CR remains at higher, meaning we expect prices to increase over the next 30 days.

Cold rolled lead times range from 5-8 weeks, averaging 6.6 weeks through our latest survey.

Galvanized coil

The SMU price range is $860–950/st, averaging $905/st FOB mill, east of the Rockies. The range is unchanged from last week. Our price momentum indicator for galvanized remains at higher, meaning we expect prices to increase over the next 30 days.

Galvanized .060” G90 benchmark: SMU price range is $957–1,047/st, averaging $1,002/st FOB mill, east of the Rockies.

Galvanized lead times range from 6-8 weeks, averaging 7.2 weeks through our latest survey.

Galvalume coil

The SMU price range is $870–980/st, averaging $925/st FOB mill, east of the Rockies. This range is also unchanged w/w. Our price momentum indicator for Galvalume remains at higher, meaning we expect prices to increase over the next 30 days.

Galvalume .0142” AZ50, grade 80 benchmark: SMU price range is $1,164–1,274/st, averaging $1,219/st FOB mill, east of the Rockies.

Galvalume lead times range from 6-8 weeks, averaging 7.0 weeks through our latest survey.

Plate

The SMU price range is $920–1,040/st, averaging $980/st FOB mill. This range is flat from last week. Our price momentum indicator for plate remains at lower, meaning we expect prices to decline over the next 30 days.

Plate lead times range from 2-6 weeks, averaging 4.2 weeks through our latest survey.

SMU note: Above is a graphic showing our hot rolled, cold rolled, galvanized, Galvalume, and plate price history. This data is also available here on our website with our interactive pricing tool. If you need help navigating the website or need to know your login information, contact us at info@steelmarketupdate.com.

Joining him for the discussion were Timna Tanners, managing director of equity research for Wolfe Research; Alex Hacking, head of steel and mining research for Citi; and Tristan Gresser, head of steel equity research for BNP Paribas Exane.

Steel price forecasts

Tanners characterized current steel demand as “not terrible, but not great,” with Hacking predicting demand will continue to weaken somewhat. This tepid demand should keep steel prices in check.

Hacking’s short-term outlook predicted a bounce in HR prices to ~$800 per short ton (st) by year’s end.

“If we look forward for the next 12 months, I do think it’s hard to argue why steel prices would be higher over the next 12 months than they have been over the last 12 months,” he said.

Tanners forecasted average hot-rolled (HR) coil prices to be around $775/st in 2025, with galvanized sheet and plate prices “staying more muted.” And with new EAF steelmaking capacity ramping up, she believes scrap prices will remain a little higher as well.

She is standing by her “Galvanized Galore” thesis: With a flood of galvanized capacity coming online in North America, she believes the galv vs. HR premium will drop further over the next two years.

Steel industry consolidation

On consolidation in the steel industry, Gresser believes the bulk of M&A is done. The challenge now, he said, is finding folks willing to sell their business.

Moving forward, he predicted we won’t see as many mergers and acquisitions but “consolidation by attrition.”

Tanners agreed that consolidation is mostly over with, although some smaller companies like Evraz North America and NLMK USA remain up for grabs.

She commented that Cliffs’ interest in purchasing USS is “absolutely off the table” after its agreement to buy Stelco.

Mill discipline

“The large amount of consolidation that we saw, in theory, allows for a more disciplined production strategy, and we really saw that from 2017 to 2022,” Hacking said in his Summit presentation.

Late in 2022 and through 2023, US sheet shipments began ramping up, but mills have been unwilling to concede market share.

Nucor, for example, who had been a leader in supply discipline, is now targeting a higher share of the sheet market. Hacking suggested the start-up of the company’s new sheet mill in West Virginia in 2025 could be when it gets aggressive in going after market share. And that could cause “significant price pressure,” he noted.

“The production discipline that we’ve seen on the sheet side does appear to be breaking down,” Hacking added.

Impact of November’s elections on steel

Gresser proposed that “the easiest bull case for US steelmakers is if Trump gets elected.”

“I think the former president has probably unfinished business with the steel industry,” he added.

Should Trump win in November, Gresser foresees the return of 232 tariffs on “sticky” volumes from Europe.

In the event of a Harris victory, he also foresees a bull case for steel, noting the strong prospects of carbon-based tariffs under a Harris administration.

Also, this January, the International Trade Commission (ITC) will submit its report on carbon intensity around the world to whoever wins in November.

“I think it’s going to be very easy to see any president, Republican or Democrat, act on it, whether it’s to fight climate change or to support reshoring. I think it’s the real possibility,” Gresser stated.

Trade relations

In his presentation, Gresser proposed that trade “is back on the agenda.” He discussed several reasons why he expects US steel imports to decline over the next year.

What could happen in the next six months? Blanket tariffs, USMCA trade frictions, carbon-based tariffs, and a return of tariffs on imports from Europe, he predicted.

He also commented that the US needs to determine what its relationship will be with its biggest trading partners, Mexico and Canada. Making a case for aggressive action against Mexico was easier a year or two ago, but now, the US actually has a trade surplus with its neighbor to the south, he pointed out.

“I think a mini trade war, or USMCA trade war, is going to be not necessarily beneficial for the US market,” he cautioned.

Watch out for the wild cards

Tanners finished her remarks by proposing some questions on potential wildcards for the steel industry:

• What happens with the restart of ArcelorMittal Lazaro Cardenas and the capacity ramp-ups at SDI Sinton, Big River Steel, and Algoma?
• Does AHMSA ever come back? (Btw, it “looks like not,” according to Tanners and other sources SMU has spoken to.)
• Will the trend of consumers buying mills affect the market? (such as Zekelman’s 5% stake in Algoma)
• What about mills advancing downstream/specialty plans? (like SDI going into aluminum.)
• Is Cleveland-Cliffs done with buying after it acquires Stelco? If not, who’s next?

Singh was presented with the award at the SMU Steel Summit 2024 conference in Atlanta on Tuesday. As COO of Superior, Colo.-based Magswitch Technologies, Singh has over a decade of experience in management and operations.

Nicola Coslett, CEO of CRU Communities; Philip K. Bell, president of SMA; and Michael D’Alexander, publisher of Modern Metals magazine, presented him with the award.

SMU congratulates Singh and the award’s other finalists, Braden Halley of Priefert and Gilberto Padilla of Andes Coil Processors, for their contributions to the industry and for being recognized as upcoming leaders in the next generation of steel.

Having trained as an engineer at Rose-Hulman Institute of Technology in Terre Haute, Ind., Schneider later found work at LTV Steel. All the while, he moonlighted in a rock band, making the rounds at Cleveland clubs.

After doing a technical startup at LTV Works Cleveland, Schneider discovered, “I’m pretty good at starting things up.”

“So that became what drove me, and drove me to SDI, and right here to the Summit so many years later,” he added.

SDI – more than a steelmaker

Asked to describe SDI as a company, Schneider expanded beyond the company’s roots. He said it’s more of a “materials or metals company” rather than strictly a steelmaker.

“Even though we started out in steel, we always saw the opportunity to bring value to customers through supply chains and resources,” he commented.

He noted that SDI has “quietly” become the largest recycler in North America through its OmniSource platform, with locations in the US, Canada, and Mexico. In the US, it operates 14 shredders, he said.

He also cited its New Millennium subsidiary as a fabrication company that manufactures steel joists and decks, with locations in the US and Mexico.

Additionally, SDI operates an aluminum smelter in Fort Wayne, and those are just a few examples he gave that stretch beyond the traditional steel industry.

Light metal

The company has other big projects in the works, namely Aluminum Dynamics.

“We’re really excited about where the whole project is,” Schneider said. He noted three previously announced components.

“Two of them are going to be slab centers where we melt locally obtained scrap, and we go ahead and purify it, clean it, and then we cast it into a slab,” he said.

He said the slab will then make its way to Columbus, Miss., where SDI is building an aluminum rolling mill.

“So if you go to our website, it’s aluminumdynamicsllc.com, we’ve been posting videos pretty regularly,” he quipped.

SDI has said the rolling facility, with an annual capacity of 600,000 metric tons, is expected to begin operations in mid-2025. A recycled slab center in Arizona will begin production in H2’25, and another in San Luis Potosi, Mexico, will begin production in Q1’25.

Outlook for 2025, Sinton

Looking ahead to next year, Schneider said, “I think we have a lot of great things happening.”

Chief among them, he noted, “I really believe that Sinton really matures into a fully operational plant.”

In April, the company announced that “certain transformer limitations” had been resolved.

Note that the Sinton, Texas, flat-rolled EAF mill has an annual steelmaking capacity of 3 million short tons, according to SMU’s EAF Status Table.

Schneider also said that the four new previously announced process lines “will be absolutely ready for more business.”

Recall that two new lines are at SDI’s Heartland flat-rolled processing mill in Terre Haute. The other two are at Sinton.

“So I see 2025 as a pretty robust year,” commented Schneider. “And I say that from an order standpoint, I’m agnostic as to what the price situation may be, but we’re going to attack it. You know our culture is designed to run full.”

Concluding, Schneider found the through line, whether with a guitar at a club or on the floor of a mill: “You know, you function better with teams of people, whether it’s a band or whether it’s a football team or whether it’s your caster team. They challenge you to be better,” he said.

She noted this was why the government was moving forward to “level the playing field, protect Canadian workers, and match measures taken by key trading partners.”

As previously reported, Canada’s steel and aluminum industries had called for tariff alignment  with the US.

Steel, aluminum tariffs

Canada’s federal government intends to apply 25% tariffs on imports of steel and aluminum products from China, effective Oct, 15, 2024, according to the statement.

An initial list of goods was released Monday for public comment, and can be found here. The final list of goods subject to the surtaxes will be announced by Oct. 1.

EV tariff

The 100% tariff on all Chinese-made EVs will be effective Oct. 1. This includes electric and certain hybrid passenger automobiles, trucks, buses, and delivery vans.

CSPA lauds move

The Canadian Steel Producers Association (CSPA) cheered the move by the government.

“Our industries strongly support and welcome today’s announcement by the Government of Canada that recognizes the strategic importance of steel and aluminum to Canada’s economic security interests,” Catherine Cobden, president and CEO of the CSPA, said on Monday.

She made the remarks in a joint statement with Jean Simard, president and CEO of the Aluminum Association of Canada.

“Moving towards the implementation of these measures, our sectors will continue to work closely with the government and all political parties to ensure the details of these measures protect Canada’s trade and economic interests,” the statement continued.

Editor’s note: This is an update of a previous article.

A 100% Mexican company, Aceromex operates its service center in Cienega de Flores and has 19 distribution centers throughout Mexico. It stocks steel plate; hot-rolled, cold-rolled and coated sheet; and various long, pipe and tube, and wire drawing products,.

The company sources its products mainly from Mexico, but also from other countries around the world. It handles over 500,000 mt of steel each year.

Raw production last week was 3.6% higher than the year-to-date weekly average of 1,720,000 st, and 2.3% higher than a year ago when mill output totaled 1,742,000 st.

US mills operated at 80.2% of capabilities last week, AISI said. This rate was higher than in the week prior (79.0%) and at this time last year (76.6%).

Year-to-date production is up to 57,692,000 st with a capability utilization rate of 76.7%. This is 1.9% less than the same time frame last year, when mills operated at 77.2% of capabilities, producing 58,818,000 st.

Weekly production by region is shown below, with the weekly changes noted in parentheses:

• Northeast – 128,000 st (up 4,000 st)
• Great Lakes – 596,000 st (up 8,000 st)
• Midwest – 220,000 st (up 2,000 st)
• South – 774,000 st (up 11,000 st)
• West – 64,000 st (up 3,000 st)

Editor’s note: The raw steel production tonnage provided in this report is estimated and should be used primarily to assess production trends. AISI’s monthly “AIS 7” report is available by subscription and can provide a more detailed summary of domestic steel production.