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How will the new tariffs impact the long products market?
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| For weeks the steel importers and consumers worried about stackable reciprocal tariffs that were bound to be announced on April 2nd, so called "Liberation Day". In the end, the administration left the 25% steel and steel articles alone from the reciprocal tariffs executive order. This means that all remain the same for steel imports as of March 6, i.e. all origins will still be subject to 25% tariffs, nothing more and nothing less.
While the reciprocal tariffs will not change the tariff rates of the steel and steel articles (such as nails, screws, fencing or mesh), it will increase the cost of all products, from all countries by a good margin. It will be extremely costly for consumers but it will be even more costlier for businesses that rely on foreign raw materials, parts, products and machinery. It will raise non-steel, non- aluminum building materials cost by a significant amount, at least in the beginning while the buyers adjust their purchases from higher tariff countries such as Vietnam (46%), Thailand (36%), India (26%) and Taiwan (32%) to lower 10% tariff countries. These adjustments can take up to a year but in the meantime, the costs will be passed on to consumers. The unaffordable prices will reduce the demand for homes, cars and goods which will cause an economic slow down. The new tariffs will raise prices and cause higher inflation. The Fed may not have many options but to raise interest rates again to combat the inflation while the economy is slowing or already in recession. This is a very real nightmarish scenario and a huge gamble on Trump's part.
But for the steel market, at least some of the uncertainty around the steel tariffs are now gone, with every country having the same tariff of 25% plus the downstream is also protected. Prices in the US have risen already for products like HRC, wire rod and pipes, yet some products like rebars are already experiencing very stagnant sales conditions and the domestic producers are struggling to raise numbers. Is there too much rebar supply right now or the concrete construction is already in recession? Whatever the reason, domestic prices for various products are probably close to peak in Q2. Buyers worry about recession and even though some of the import pricing may look pretty attractive right now, they are hesitant to make more rebar and wire rod purchases with long lead times. |
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| | | From our content partner, SteelOrbis
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US import rebar and wire rod pricing moves higher as markets react to growing trade uncertainty Thursday, 27 March 2025 19:55:12 (GMT+3) San Diego
US import rebar and wire rod markets moved higher this week as uncertainty remains heightened regarding current 25 percent Section 232 tariffs on the US two largest trading partners, Canada and Mexico, as well as the upcoming start of reciprocal import tariffs on a selected group of nations expected to be enacted by the US Trump administration next week on April 2.
While media reports indicated March 21 that Trump was likely to be more "flexible" regarding who will be subject to the start of reciprocating tariffs next week, markets remain on edge about their effects on pricing as well as existing supply chains. Concerns are also heightened as a potentially more disruptive new Trump administration policy regarding to the movement of steel and other imported products into US ports on Chinese-made ships is expected soon.
Following a final March 26 US Trade Representative (USTR) public comment hearing attended by trade and shipping industry groups, a decision on potential fees to be charged on Chinese shipping could find between $1.5 million and $3.5 million, and could be levied on each Chinese-built ship seeking to offload cargo at US ports.
"If I was an importer, I wouldn't touch anything from Vietnam or many Asian countries, one long steel import insider commented to SteelOrbis. "The EU and Asian countries are a direct target of Trump's reciprocating tariffs." Media reports indicate part of Trump's increased flexibility on reciprocating tariffs involves a plan to target the world's top 15 countries with the highest trade imbalance with the US. Those countries according to USTR based on the size of their trade deficit with the US are China, the EU, Mexico, Vietnam, Taiwan, Japan, South Korea, Canada, India, Thailand, Switzerland, Malaysia, Indonesia, Cambodia, and South Africa.
In the imported rebar markets, spot supply on a loaded truck basis at the US Gulf Coast and US East Coast rose about $0.25/cwt., or $5/nt ($6/mt), to $37.00-38.00/cwt. ($740-760/nt or $816-838/mt), up from $36.75-37.75/cwt. ($735-755/nt or $810-832/mt) one week earlier. May shipments from Egypt, Algeria, Turkey and Vietnam for June-July delivery into the US Gulf Coast are last heard at $38.00-39.00/cwt. ($760-780/nt or $838-860/mt), up from $37.00-38.00/cwt. ($740-760/nt or $816-838/mt) seven days ago.
"I can't sell at $37.00/cwt. today," remarked one import market insider on the slight weekly price increase. "As domestic prices remain pretty high, we're expecting the price of imports to be more attractive over the next few months." Domestic rebar pricing fell a bit this week on reports of adequate supply and minimal new demand. Domestic supply on an FOB mill basis is assessed with most transactions noted at $39.00-40.50/cwt. ($780-810/nt or $860-893/mt), on average $39.75/cwt. ($795/nt or $876/mt), down $1.00/cwt. ($20/nt or $22/mt) from seven days ago.
Mexican markets remain quiet with import rebar on a loaded truck basis vicinity Houston, Texas, last offered from available stock in the US at $37.00-39/cwt ($740-780/nt or $816-860/mt), up from $36.00-37.00/cwt. ($720-740/nt or $794-816/mt), one week prior.
On the import wire rod mesh front, import material on a DDP loaded truck basis USG was assessed higher at $38.00-39.00/cwt. ($740-780/nt or $816-860/mt), up from $37.50/cwt. ($750/nt or $827/mt) a week ago. US domestic rebar down ahead of new reciprocal tariffs; wire rod steady pending availability from Liberty Steel Wednesday, 26 March 2025 22:01:15 (GMT+3) San Diego
Following two weeks of steady pricing, US domestic rebar pricing moved lower this week as traders remain sidelined waiting on the US Trump administration to announce the start of reciprocal tariffs next week on April 2. Wire rod pricing, which has remained solid lately, was reported flat, as concerns grow over the expected restart of Liberty Steel's downed wire rod plant, market insiders. told SteelOrbis.
Insiders added that domestic mills remain reluctant to increase rebar pricing out of fear that if mills were to roll out more price increases, imports could become more competitive. Recent reports of high levels of rebar "on the ground" at US mills and at import dock locations also are limiting the ability for prices to rise much, they said.
With April 2 looming, market activity remains "a bit slow," with many still in a "wait and see" mode. In addition to current 25 percent tariffs on imported steel and aluminum, Trump's new trade plan for reciprocal tariffs would basically match on a tit-for-tat-basis all existing duties now levied against the US from foreign trading partners. Many have vowed retaliation, even as uncertainty remains high.
Yesterday, media reports said Trump's new focus on reciprocal tariffs will be more "measured," with the concentration narrowed to the so-called "dirty 15° nations that have the highest current trade imbalances with the US. The March 24 announcements on social media platform Truth Social comes after Trump hinted Friday, March 21, that he might be more flexible on how he imposes the new tariff duties.
According to the US Trade Representative (USTR), the top 15 nations in order of the size of their trade deficit with the US are China, the EU, Mexico, Vietnam, Taiwan, Japan, South Korea, Canada, India, Thailand, Switzerland, Malaysia, Indonesia, Cambodia, and South Africa.
In the weekly rebar spot markets, domestic supply on an FOB mill basis is assessed with most transactions noted at $39.00-40.50/cwt. ($780-810/nt or $860-893/mt), on average $39.75/cwt ($795/nt or $876/mt), down $1.00/cwt. ($20/nt or $22/mt) from seven days ago.
"This price reflects a more realistic market as the steel mills have tried to push these numbers higher, but there is still so much material on the ground that the price did not go up," another insider told SteelOrbis.
In the wire rod markets, while Peoria, Illinois-based Liberty Steel's wire rod plant was initially expected to restart in mid-March, insiders said, the restart may have been further delayed. "Contrary to Liberty Steel's plans, they are still not up and running their wire rod mill," said one Midwest wire rod insider. "Rumor has it, the financing package continues to be in negotiation."
In the domestic wire rod market, most transactions were reported this week at $43.00-44.00/cwt ($860-880/nt or $948-970/mt), or an average of $43.50/cwt. ($870/nt or $959/mt), unchanged from seven days earlier.
"In a week's time, hopefully with full knowledge of the reciprocal tariffs, the steel market will have a better direction for pricing," a market insider told SteelOrbis. US April scrap prices seen soft sideways to $20-40/gt less as supplies are reported to be growing Thursday, 27 March 2025 23:07:43 (GMT+3) San Diego
The expectation among market insiders for April scrap pricing seems to be one of soft sideways to as much as $40/gt less next month, off sharply from recent flat expectations, as supply at mills and local scrapyards is reported to be more than adequate to meet current demand levels, following recent first quarter price increases and better weather as spring temperatures arrive across much of the US, market insiders told SteelOrbis this week.
During the first quarter, scrap insiders told SteelOrbis that cold snowy weather in the US Upper Midwest, Northeast, South and Southeast had limited the amount of new scrap sold by sub-collectors to yards, causing limited availability during monthly scrap supply negotiations with local mills. Transportation of material to mills from yards also was said to have been hampered by extremely poor weather conditions and ongoing maintenance programs.
"Scrap is seen stable to down," said one Midwest scrap insider. "Many people are waiting to see what the mills will do next week on April 2." April 2 begins the expected start of reciprocating tariffs by the US Trump administration. The tit-for-tat tariffs, as part of US president's plan to be "more flexible," is now likely to target the top 15 countries that currently maintain the highest trade imbalance with the US.
Market insiders also point to a potential recent peak for finished steel pricing as a reason for a steady to lower outlook for April scrap. This week, spot hot rolled coils are discussed at an average of $900/nt ($992/mt), or $45.00/cwt., off from $950/nt ($1,047/mt) or $47.50/cwt., one week prior. Market insiders said current flat steel price levels could be high enough to begin to encourage the entry of more imports, even with tariffs, therefore, many mills have been reluctant to continue to raise price offers.
Domestic steelmaker Nucor only increased its Consumer Spot Price (CSP) for HRC this week by $5.00/nt ($6/mt) to $935/nt ($1,031/mt), or $46.50/cwt, following earlier weekly price increases that approached $40/nt ($44/mt) at the end of February and the beginning of March. Overseas, deep sea scrap prices for Turkey may have reached a peak and will likely move sideways in the coming round of bookings, market insiders told SteelOrbis this week.
During much of the most recent March scrap buying period, mills and traders in the US were bracing to potentially pay a 25 percent tariff on any scrap they purchased from Canada or Mexico. Prices settled up $20-$30/nt from February levels.
That tariff rate went into effect March 4 before two days later being paused for one month for imports determined to have a status in compliance with the United States-Mexico-Canada Agreement (USMCA), which included metals for recycling.
According to the US Census Bureau data aggregated by the US Geological Survey (USGS), from 2020 to 2023, 71 percent of imported ferrous scrap purchased by American steel mills and foundries came from Canada, while just 12 percent was shipped from Mexico.
It remains unclear what US president Trump will do with regard to Section 232 tariffs on Canada and Mexico, though some think he will make further concessions on tariff rates in an attempt to save the most important parts of his USMCA trade agreement he negotiated with Canada and Mexico in his first term. Following the March buy-cycle, prime grades of March busheling scrap in the US Ohio Valley settled $30/gt ($30/mt) higher to $485-510/gt ($493-518/mt) delivered to mill, while shredded grades settled an average $25/gt ($25/mt) up at $455-460/gt ($462-467/mt) on a delivered basis. HMS and P&S grades showed a $20/gt ($20/mt) increase from settled February levels at $395-415/gt ($401-422/mt), and $441-451/gt ($448-458/mt), respectively, on a delivered to mill basis.
In the US Northeast, monthly scrap price expectations, which started the March buy-cycle period as high as $35/gt ($36/mt) premiums across all grades, moderated towards the plus-$20/gt level on a delivered basis as more supply became available from sub-collectors amid rising supplier offers at local yards and warmer weather-inspired inflows, insiders said. Better price expectations in Midwest markets also were said to have diverted a portion of that East Coast scrap away from local and export markets. |
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