Domestic hot-rolled coil, the benchmark U.S. steel product, is 23 percent more expensive than imported supplies.

United States President Donald Trump’s threatened steel tariffs that don’t kick in for two weeks are impacting U.S. buyers who already are seeing American-made metal cost more than imports.

The benchmark price for domestic steel touched more than US$900 a ton this week, up almost one-fourth this year, in anticipation of the imminent 25 percent levy on foreign supplies. That surge means U.S. prices have now moved above par with imported steel, according to people active in the market who asked not to be named discussing non-public information.

“What we’re seeing so far happen is mills capitalize on the tariffs and uncertainty of tariffs, and they’ve been able to raise prices such that at US$900 a ton, it’s more than what would happen to price with an actual 25 percent tariff implemented,” Timna Tanners, an analyst at Wolfe Research, said during a telephone interview. “This isn’t the desired outcome Trump has articulated.”

Metal shipments are pouring into the U.S. from all over the world, including cargoes from Egypt, Algeria, Malaysia, Brazil, and Vietnam, according to a person familiar with the flows. The influx comes amid relatively anemic U.S. steel demand as high borrowing costs make it expensive for buyers to move ahead with projects in everything from construction to appliance manufacturing.

Trump earlier this month ordered a 25 percent tariff on steel and aluminum imports, and in the process announced he would rescind all existing country-level exemptions. The specter of a protectionist wall emboldened domestic steelmakers like Nucor Corp., Cleveland-Cliffs Inc., United States Steel Corp., and Steel Dynamics Inc. to raise prices.

 

Source: Financial Post