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| Steel |
Tariffs inflate US steel prices despite weak demand
Steel prices higher than they should be reflect persistent tariff-driven supply disruptions. Weak demand persists in construction, manufacturing, and industrial sectors. HRC prices surged over $956 per short ton in March 2025. However, market fundamentals do not justify such high levels. Therefore, tariff uncertainty adds a significant risk premium, prompting traders and mills to adjust sourcing and pricing strategies.
Supply chain adjustments and domestic substitution
Meanwhile, tariffs reshaped steel supply chains, supporting near-term prices. Traders and processors increasingly source from domestic mills. Import substitution does not match ton-for-ton with domestic output, reducing overall inventory along the chain. Nevertheless, specialty products like AR400, AR500 plates, and electrical steels still rely on imports. As a result, domestic sourcing partially offsets import restrictions while sustaining elevated prices.
Legal rulings and economic factors influence future trends
However, legal and economic uncertainty continues to affect volatility. The Supreme Court ruling on tariffs may redirect prices toward fundamentals. Furthermore, tepid demand, slower wage growth, and moderate mortgage rates suggest price moderation in 2026. Trade negotiations, downstream industrial performance, and monetary policy will also determine steel market dynamics over the coming months.
ScrapInsight Commentary
Steel prices remain artificially high due to tariffs and supply chain adjustments. As legal uncertainties resolve, prices should realign with supply-demand fundamentals. Industry participants should monitor downstream demand and trade policy for near-term strategy.
