United States

Recycled steel dealers in the USA enjoyed a brief rally in the first quarter of 2025. With tightness in availability owing to inclement weather and a rally in the price of hot rolled coil (HRC), dealers experienced a solid period of rising prices and healthy demand. Prices from January through March saw an increase of US$ 60-90 per ton in domestic recycled steel prices. Historically, three consecutive months of price increases are all the market will bear, and this rally was no different.

By April, flows had increased substantially on improved weather and higher prices. But later in the month, it became apparent that market fundamentals were shifting - and not in favour of US dealers - as the strain of tariffs began to take hold. Dealers in the southern US dependent on Mexican recycled steel purchases saw that market virtually disappear overnight owing to tariffs that drastically weakened Mexican consumer demand. With no Mexican market to ship to, those tonnes turned northwards and saturated a US market that was already seeing flows increase. Grades like P&S were particularly hard hit as large volumes became available overnight, competing with existing flows and pushing prices lower.

In turn, the market for HRC was peaking and beginning to show signs of weakening. After seeing a strong rally in the first quarter, the market began to get a little frothy. Prices that had started the year below US$ 700 per ton were now in the mid-US$ 900 range, but stalling. While real sales were being made at the US$ 950 level, the futures market was already predicting lower prices. HRC indexes appear to have peaked in April and are now turning the corner southwards on weakening consumer demand. There was a lag in that development as US consumers took to “pre-buying” to beat tariffs. This was reflected in higher sustained orders; however, those orders now appear to be in the rearview mirror as consumer confidence has plummeted in the last two months.

The US economy is 70% consumer-driven, and that impact did not go unnoticed by mills as they strategised for April and May buying. In April, the slight overhang of recycled steel, coupled with a weaker export market, allowed mills to cut prices by US$ 20-40 per ton. While dealers had hoped that the bleeding might have ended there, a precipitous fall in export prices has since pushed the US market down even further. While the ever-important Turkish recycled steel market has appeared to find a temporary floor, this was not before a drop of over US$ 50 per ton in April. That set the trend for May as mills now saw an opportunity to reduce recycled steel prices even further on a combination of weak exports, adequate supplies and a weakening US economy.

While the initial shock of tariffs has dissipated, the uncertainties of the long term continue to weigh on the market. Important US export markets like Turkey and Taiwan remain under pressure on weak sales and a continued healthy availability of recycled steel alternatives like cheap Chinese and Russian billet. The health of those economies, including Mexico, continues to weaken, as reflected in their falling manufacturing PMIs: all the major consumers of US recycled steel are now in sub-50-point contraction mode, which does not bode well either for the future of the major world economies or for recycled steel.

In addition, we are now approaching the seasonal summer doldrums when demand naturally slows. Mills in key recycled steel-consuming countries like Taiwan are already under summer energy restrictions that increase energy costs as well as reduce production and demand. Although demand is what is needed to support recycled steel prices, this does not increase in the summer.

Most US dealers have already acquiesced to lower prices in May. At the time of writing, the market has just started to trade - with dealers now expecting a repeat of the April market. Many mills have slightly reduced programmes, and most of them are a little concerned about future business in a deeply uncertain market. While there appears to be no imminent reason for recycled steel prices to rally, dealers are aware that the heat of summer, coupled with two months of falling prices, will slow recycled steel flows. Phoenix in Arizona broke the record last year for consecutive days with temperatures above 100 degrees Fahrenheit; recycled steel flows, in some cases, were off 50% in those regions. Another long, hot summer - especially with lower recycled steel prices - will definitely inhibit flows. The question is what level of demand mills will have in this weakening market. With little certainty owing to the current trade war environment, it is hard to tell; the reality is that no-one knows for certain what will happen. What we do know is that most people are tightening their belts for a bumpy ride.