U.S. prices have shot higher following threats and the realization of new import tariffs on steel. Meanwhile, the forward curve of HR coil prices has jumped by $55/s.ton over the last month as tariffs have tightened supply. We discuss how prices compare to the start of S232 in 2018.

The imposition of new steel import tariffs in the U.S. has helped fuel a sudden, sharp rise in sheet prices. However, in other parts of the Americas, prices have either fallen or stayed the same m/m. In Mexico, the threat of tariffs from the U.S. has prompted a decrease in domestic pricing, especially because steel containing goods are now being targeted, threatening Mexican manufacturers.

Our second Wednesday HR coil price assessment for February came in $65/s.ton higher m/m. CR coil and HDG coil base prices were also up m/m, rising by $16/s.ton and $33/s.ton to $930/s.ton and $876/s.ton, respectively. We have seen a notable rise in spot market activity since our last monthly report, and discounts for larger volume buys seen a few weeks ago are now entirely gone from the market as price rises gain momentum.

There have been some major changes over the past month in the U.S. market following the inauguration of President Donald Trump on January 20. Potential tariffs that were threatened on a broad variety of products imported from Mexico and Canada were delayed until March, but this week the administration signed an executive order that has essentially reset Section 232 tariffs to their original state (25% tariffs on steel on all countries without exception or exclusion). The elimination of existing exclusions is due to occur on March 12.

While these new trade actions are supportive of U.S. domestic prices, buying activity has also increased recently. In part, this has been driven by buyers looking to get ahead of anticipated price rises in the coming weeks and months, especially with the threat of tariffs looming. Mill order books have been filling up and, as a result, lead times have pushed out. As of this week, U.S. Steel and Cleveland Cliffs are targeting $800/s.ton for HR coil, while Nucor raised its publicly published price to $790/s.ton. 

Still, many service centers report that end-use demand has yet to rise substantially so far this year. However, they also noted that it is higher than what was seen for most of H2 2024. To this end, inventory levels that looked elevated heading into 2025 now look much more balanced with demand. This, when coupled with a $40-50/l.ton rise in scrap during February trade, has added further support to prices. That said, if end-use demand does not increase further as anticipated later this year, this could become a potential headwind to price increases beyond the short term. This headwind could be strengthened by the fact that capacity can still rise from current levels (a ramp up at Big River Steel #2, higher run rates at SDI Sinton and a potential restart at Cleveland Cliffs’ #6 blast furnace in Cleveland). Indeed, the first time Section 232 tariffs were implemented we saw a large increase in pricing for the first half year, followed by a decline that eventually forced prices below where they had initially started (see chart).

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The forward curve of HR coil prices has jumped by $55/s.ton over the last month as tariffs have tightened supply. We discuss how prices compare to the start of S232 in 2018.

HR Coil futures listed by CME Group have jumped after changes to the S232 tariffs. Last month on January 8 we noted that “If this (tariff) risk turns into reality, the current market may actually offer natural buyers an opportunity to hedge the cost of their supply in 2025 at a price level quite near the annual average price of 2024.”

Today, we have the S232 tariffs returned to their original state where all steel imports into the U.S. will be assessed a 25% tariff without exception. The U.S. market is dependent upon imports, therefore, landed imports often set the market price for steel sheet. Physical prices are now running higher, and futures prices are ahead of the move.

The following chart shows the current forward curve through December. Interestingly enough, physical and futures prices are quite similar to 2018. At that time, when S232 originally came into force, HR coil prices peaked at $918/s.ton after starting the year at $661/s.ton on the second Wednesday in January.

Today, the forward curve is pricing in an annual average of $836/s.ton, up by $55/s.ton m/m. While we expect some negotiations to come for exclusions or a lower tariff rate, we expect that physical prices will continue to rise. If that happens, we are likely to see higher futures prices as well. However, we also expect that 2.4 Mt of new EAF-based sheet capacity will run this year. Significantly higher futures prices may allow those producers to lock in a substantial margin.

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