U.S. STEEL PRICES PLUNGE SHARPLY

Since the U.S. administration under President Donald Trump imposed tariffs on imported steel in March, domestic steel prices have fallen sharply, returning to levels seen before the tariffs took effect.

In recent months, U.S. steel producers have ramped up output, expecting that import tariffs would make foreign steel more expensive and thus boost demand for domestically produced steel.

However, weakening demand in the United States is now undermining Mr. Trump’s efforts to revive the American steel industry — and could further exacerbate the problem of global steel oversupply.

According to data from SteelBenchmarker on August 25, the U.S. hot-rolled coil price stood at $911 per ton, the lowest since February and down 10.7% from $1,020 per ton at the end of April.

Rising Supply Drives Prices Lower

An increase in supply is one of the main factors pushing down steel prices in the world’s largest economy.

On March 12, the Trump administration imposed a 25% tariff on imported steel, later raising it to 50% in June.
In response, U.S. steelmakers expanded production, believing that higher import costs would encourage customers to switch to domestic steel.

According to estimates from the American Iron and Steel Institute (AISI), domestic mills are now operating at nearly 80% capacity, up from around 74% earlier this year.
In July, U.S. crude steel output rose 4.8% year-on-year to 7.1 million tons.

Imports Did Not Fall as Expected

Despite higher tariffs, U.S. steel imports have not dropped as much as producers anticipated.
In June, the country imported 2.2 million tons of steel, a slight increase from the same month last year, before declining modestly in July.

Much of this imported steel likely came under contracts signed before the 50% tariffs took effect, according to industry analysts.

With rising supply and declining demand, the price pressure has intensified.

Weak Manufacturing Sector Dampens Steel Demand

A report from the Institute for Supply Management (ISM) in August showed that the U.S. Manufacturing PMI stood at 48.7 points, marking the sixth consecutive month below the 50-point threshold.
A PMI below 50 indicates contraction in manufacturing activity.

Amid policy uncertainty and high interest rates, industrial output in the U.S. has stagnated, dragging down demand for steel.

“Summer is always a low season for steel demand, and this year it’s even weaker due to high interest rates.
Wholesalers appear reluctant to increase inventory until borrowing costs start to fall,”
said Atsushi Yamaguchi, senior analyst at SMBC Nikko Securities.

Producers Slash Prices Amid Slow Sales

Major U.S. steel producers, including Nucor, have been cutting hot-rolled coil prices in recent weeks.

“Steel prices rose earlier this year as wholesalers built up inventory ahead of the tariff increases.
But actual demand from construction and automotive sectors remains sluggish, so they won’t restock unless necessary,”
a representative of a U.S. steel company told Nikkei Asia.

The current situation raises the question of whether Trump’s steel tariffs have been effective in reducing imports.

According to analyst Yamaguchi, steel imports into the U.S. may decline after August, as the price advantage of imported steel has been eroded by the 50% tariff.

Some other market observers predict that steel prices could rebound if the Federal Reserve lowers interest rates at its upcoming mid-September policy meeting — a move that could stimulate manufacturing activity and help stabilize steel demand.