Cataclysmic predictions for the price of hot-rolled coil were not on the menu at this year’s Steel Summit from Steel Market Update. Rather, the North American market is likely looking at a modestly softer pricing environment for the steel industry in 2025.
Timna Tanners, an SMU fixture who previously wrote about Steelmaggeddon, is still expecting new capacity to depress pricing, but not to any kind of debilitating levels. She’s forecasting HRC to average $775 per short ton in 2025.
“The new normal is looking a lot like the old normal,” said Tanners, the managing director for Wolfe Research.
Her panel colleague, Alex Hacking, had a similar take. He is projecting HRC to average somewhere between $750 and $800 next year.
“Looking forward, it’s hard to argue why steel prices would be higher over the next 12 months than they have been over the last 12 months,” said Hacking, the head of steel and mining research for Citi.
Digging deeper into the numbers, Tanners is expecting the premium enjoyed by hot-dipped galvanized and plate to be more muted in 2025. She’s pegging galvanized to average $975 and plate to average $950, both more than $100 below their 2024 averages.
There are a number of conflicting factors driving their forecasts. On the one hand, capacity is expected to climb next year as Sinton continues to move toward full strength and projects from Big River, Algoma, Nucor and Ternium come online.
“The worst case scenario is all the new capacity hits the market and there’s a softness in demand. We’re kind of in that right now, though demand isn’t that bad,” she said, not-ing both auto and construction have remained OK.
Perhaps a bigger development is the discipline of the mills. Since the pandemic, which coincided with further consolidation of mill ownership in North America, the steel producers have been circumspect with ramping up output. But Hacking said that self-control might be waning.
“Nucor was the leader on the supply discipline side. Now it seems they’re not willing to concede share. For various reasons, blast furnaces are not willing to concede share,” he said.
He said the commissioning and ramp up of Nucor’s new mill in West Virginia will be quite telling as to the company’s attitude going forward. “From where I sit, the new West Virginia mill from Nucor is going to be interesting to follow and could mark a turning point. They’re targeting higher market share in sheet products and maybe West Virginia is where they decide to really go after that.”
One additional factor working against pricing is the ongoing problems in China. The country’s construction market has plummeted and manufacturing isn’t keeping up. The end result is an extra 50 million tons of steel that will be hitting the world market. Obviously, the U.S. is well-guarded against direct Chinese imports, but it could still have an impact on the global price of HRC.
In the short term, the Chinese issues are not having that effect. “Imports should be pretty low for the near future because the pricing arbitrage is unattractive,” Tanners said.
Contributing to the unattractiveness are the tariffs that have been part of the landscape since 2018. And, even with an uncertain presidential election looming, that is unlikely to change.
Tristan Gresser, head of steel equity research for BNP Paribas Exane, the third member of the panel, outlined how protection measures are likely to continue to be at the forefront regardless of the outcome.
A victory by former President Trump would result in a “bull case” for steel, with possible resumption of tariffs against allies and foes alike. “A 10 to 20 percent blanket tariff could act as a mini-232,” he said.
A win by Vice President Kamala Harris could result in a similar outcome for a different reason. The Biden administration has already been looking at ways to enact a carbon tax in its climate change efforts, a push that’s receiving increasingly bipartisan support.
Thus, “Trump or Harris, it’s steel that wins,” he said.
Over the longer term, the panelists believe the tariffs will result in both a higher floor and a higher ceiling on steel prices. However, Tanners says we shouldn’t expect to see “four-digit HRC prices on a sustainable basis anytime soon.”