US steel tariffs announced by President Trump are causing domestic prices to rise sharply, now exceeding import prices. Despite lower domestic steel demand, prices are inflating due to mills capitalizing on tariff uncertainties. The surge in steel price places significant pressure on both Canadian and American manufacturers, leading companies to reevaluate their pricing and supply strategies.
US President Donald Trump’s impending tariffs on steel are already affecting domestic metal prices. Anticipation of a 25% tariff has driven the benchmark price for American-made steel to over $900 per ton, a nearly 25% increase this year, outpacing imported steel costs. Market analysts indicate that this surge was influenced by mills capitalizing on the uncertain tariff situation.
The influx of metal shipments from countries such as Egypt, Algeria, Malaysia, Brazil, and Vietnam continues, despite weakened domestic demand driven by high borrowing costs. Trump approved new tariffs earlier this month and removed existing country-level exemptions, an action that encouraged steel producers to inflate prices. Recently, domestic steel prices reached levels not seen since early 2024, with quotes approaching $1,000 per ton.
Domestic hot-rolled coils are now priced 23% higher than their imported counterparts, as indicated by Steel Market Update. Canadian and Mexican steel manufacturers are reportedly refusing new orders in light of these developments, placing significant strain on companies like Algoma Steel Group Inc. Due to global oversupply, Canadian producers find it imperative to continue selling to US markets.
The Canadian steel industry remains heavily reliant on the US, with the latter receiving the majority of its foreign imports from Canada. Approximately 93 million tons of steel were consumed in the US in 2023, with net imports fulfilling 13% of demand. Canadian exports to the EU remain negligible, reinforcing their dependency on US markets. Conversations regarding tariff impacts and price adjustments among US and Canadian businesses are anticipated as both parties navigate the industry challenges.
The impending implementation of steel tariffs has significantly impacted domestic pricing, pushing U.S. steel prices higher and affecting the dynamics of international steel trade. As market participants adjust to these changes, it remains to be seen how this will influence both domestic producers and foreign suppliers. The reliance of both Canadian and U.S. markets on each other underscores the complexities resulting from these tariffs.
Original Source: www.thestar.com.my
