The potential 25% tariffs on steel imposed by President Trump have caused US domestic steel prices to rise dramatically, surpassing import values. This surge, driven by market uncertainties on both domestic and international levels, has disrupted trade relationships, particularly affecting Canadian steel producers who rely heavily on US demand. While new orders are becoming scarce, domestic steel prices continue to climb amidst unchanged demand.
US buyers are facing price hikes for domestic steel due to anticipated tariffs imposed by President Trump. As domestic steel prices soared to over $900 per ton—up nearly 25% this year—due to the impending 25% levy, the market has seen domestic prices surpass those of imports. Analysts like Timna Tanners from Wolfe Research noted that the price increases have occurred ahead of actual tariff implementation, contradicting Trump’s intended outcomes.
Market dynamics have shifted as steel shipments from various countries, including Malaysia and Vietnam, continue to flow into the US amid weakened domestic demand. High borrowing costs are pushing buyers away from projects requiring steel, which in turn prolongs low consumption levels. The industry has observed that domestic producers are quoting prices as much as $1,000 per ton, a significant rise compared to prices only five weeks prior, which were under $700.
Domestic steel, particularly hot-rolled coil, is now pricier than imported alternatives by 23%. Canadian and Mexican steelmakers are struggling with new order refusals as domestic prices climb. The Canadian Steel Producers Association has indicated that the pressure from US tariffs is compelling them to maintain current pricing structures, as alternatives markets are not feasible due to overcapacity.
The reliance of Canadian steel producers on the US market remains profound, with less than 0.1% of output being sold to EU buyers. CEO Michael Garcia of Algoma Steel has highlighted the stress on order books due to the tariff environment. The ongoing situation showcases the complexities introduced by tariff threats on international trade flows, domestic pricing, and steel supply chains.
The looming steel tariffs have significantly impacted US domestic steel prices, leading to higher costs for buyers and undermining intended tariff outcomes. As domestic prices escalate, the market faces challenges from ongoing steel imports and reduced project demand. Continued reliance on the US market by Canadian steel producers further complicates the industry’s adaptation to these tariff-related pressures.
Original Source: www.thestar.com.my
