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Market Overview – Early February 2025
Steel Market Overview – Early February 2025
TARIFF
On Feb 1st, the Trump Administration announced extraordinary new tariffs on Mexico, Canada and China. The tariffs amounted to 25% on all imports from Mexico and Canada and 10% on Chinese imports. The tariffs were set to take effect Tuesday Feb 4th. On Mon Feb 3rd, the 25% tariffs for all imports from Mexico and Canada were delayed for (1) month while talks resumed. However, the new 10% tariffs on all imports from China went into effect on Tuesday Feb 4th. It is unknown if 10% tariffs on China will change or if the 25% tariffs on Mexico or Canada will be fully or partially implemented a month from now. If the new tariffs are implemented, then not only will steel commodities be affected, but so will steel related fabricated and machine value added parts. According to the U.S. Steel Import Monitor, steel commodity imports over the past 12 months, not including steel value added parts, totaled 5.4 million tons from Canada, 2.9 million tons from Mexico and 487k tons from China. The amount of imported steel commodities from Canada, Mexico and China is substantial. The uncertainty regarding long-term viability of new tariffs may drive some buyers to be more reliant on domestic sources over the near-term and improve domestic demand.
SCRAP
The AMM shredded scrap index for Chicago was up $18/GT in mid Jan ’25, settling just under $386/GT. The index is at its highest point since early Sep ’24, but still well below the high point of last year of $471/GT achieved in Jan ’24. Scrap prices increased in Jan ’25 as expected and some market participants are expecting another modest increase between now and early Mar ‘25.
CARBON PLATE
Mill lead times are 4-5 weeks from the West Coast and are roughly 8-9 weeks when rail is included from mills East of the Rockies. North American plate mills steadily dropped carbon plate prices throughout ’24, but have done an about face in the last two weeks. Nucor announced (2) plate price increases implementing a $60/ton increase in late Jan ’25 and a $40/ton price increase in early Feb ’25, for a total plate price increase of $100/ton. Other mills including Cliffs, Evraz and SSAB have also issued recent price increases. Some mills have cited increased demand and are starting to lengthen their lead times. Some market participants expect another price increase if incoming mill orders continue to expand.
HOT ROLL SHEET
Mill lead times are 4-6 weeks from the West Coast and range between 7-9 weeks for delivery from mills East of the Rockies to the West Coast. Domestic hot roll coil prices steadily decreased from Jan ’24 to mid Jul ’24 posting an overall price drop of $387/ton. However, since mid Jul ’24 to early Feb ’25 hot roll coil prices have increased by roughly $108/ton. Independent indexes and the Nucor Coil Spot Price (CSP) have increased over the last (2) weeks with one index moving up $34/ton and Nucor’s CSP increasing $25/ton. Some market participants are forecasting additional price movements based on the uncertainty of trade policy and a forecasted increase in scrap prices. Overall hot roll mill capacity appears to be able to support current demand.
HSS TUBE
Tube mill rolling cycles are 4-6 weeks for West Coast tube mills. Domestic tube mills steadily decreased prices throughout the course of ’24 by roughly $650/ton. As expected, domestic tube mills issued price increases over the last month. The Jan ’25 tube price increase amounted to $40/ton and the early Feb ’25 tube price increase amounted to $60/ton for a total tube price increase of $100/ton. Some market participants believe tube mills issued a collective $100/ton price increase to not only absorb the recent hot roll coil price changes, since coil is the primary raw material to manufacture tube, but to also expand the spread between a historically low difference between hot roll coil and tube.
MERCHANT BAR
Lead times are roughly 4-6 weeks for most mill rolling cycles on the West Coast. Domestic merchant bar mills decreased prices 3 times in ’24, with the largest price decrease of $120/ton coming from Nucor in Oct ’24. Merchant bar pricing has remained unchanged since the Oct ’24 price decrease. However, some merchant bar mills are starting to telegraph that a price increase may be in the works over the coming month pointing to higher scrap prices as the justification.
BEAM
Lead times are roughly 7-9 weeks for West Coast delivery. Published prices from domestic mills have remained unchanged for 11 months. Beam imports are still available below domestic prices, which may prevent beam prices from rising in the near term.
REBAR
Lead times are roughly 4-6 weeks from West Coast rebar mills. Domestic rebar prices deteriorated by roughly $160/ton over the course of ’24. In a recent change, some domestic rebar mills announced a price increase of $30/ton in mid Jan ’25. However, some market participants identified that the Jan ’25 price increase may have not have been fully applied to all markets. Like merchant bars, some domestic mills have cited rising scrap prices as a reason for a possible rebar price increase in the coming month.
MARKET
Mill prices for plate, sheet and tube have all increased in the past month. Some variables that impact steel prices include raw material changes, overall steel demand, the uncertainty surrounding the Trump Administration tariffs, pace of interest rate changes and the strength of the US$. In early Feb ’25, increased scrap prices may be the catalyst for merchant bar and rebar mills to increase prices. Demand appears to be improving for plate products, but there is some uncertainty if other products are experiencing increased order volumes. The new 10% tariffs are in place for China, which also impact value added items, while the new 25% tariffs targeting Mexico and Canada are on hold for the next 30 days. US interest rates were left unchanged at the Fed’s last meeting in late Jan ’25 with a current federal funds rate of 4.15% – 4.5%. The US$ continues to strengthen against other major currencies, which could dampen rising commodity prices over the long term. According to the Institute of Supply Management (ISM), the manufacturing sector expanded in Jan ’25 for the 1st month after a year of monthly contractions. ISM indicates domestic manufacturing contracted month over month with an index of 50.3 in Jan ’25, which was up from 49.3 in Dec ’24. The ISM New Orders and Production indexes expanded at 55.1 and 52.5 respectively in Jan ’25 vs. 52.1 and 49.9 in Dec ‘24. ISM readings greater than 50 signal expansion. According to the US Dept. of Labor, nonfarm payrolls increased by 256,000 in Dec ‘24 and the unemployment rate decreased to 4.1%. The US Dept. of Commerce indicated that real gross domestic product (GDP) expanded in Q4 ’24 at 2.3% through advanced estimates, while Q3 ’24 expanded by 3.1% and 3.0% in Q2 ’24. US GDP rates for Q1 ‘25 are expected to continue to expand.
Sources Include: US Labor & Commerce Departments, Domestic Steel Mills, Scrap Processors, Steel Consumers, ISM, AMM, SIMA, SMU
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