There has been buoyancy in US flat-rolled steel prices this year. Seasonal demand pick-up coupled with high lead times have positively impacted flat-rolled steel prices. It’s also worth noting that U.S. Steel (X) and AK Steel (AKS) took some of their flat-rolled capacity offline in 2015 in response to falling spot steel prices. In the flat-rolled space, cold-rolled coil prices saw a greater traction over the last two years on higher demand from key end-user industries including automotive and consumer appliances.
Long steel products
However, rebars (or reinforcing bars) have been a somewhat different story. Rebar prices have underperformed HRC (hot rolled coil) recently. Subdued demand from the nonresidential construction sector coupled with production overcapacity seems to be working against rebars.
Nucor (NUE) is the largest rebar producer in the United States. Unlike U.S. Steel and AK Steel, which are predominantly flat rolled steel producers, Nucor’s product portfolio consists of both long and flat steel products. While flat rolled steel products have been resilient, long steel prices have lagged.
Now, with President Trump finalizing a 25% tariff on all steel products, we could see some traction in long steel prices. Notably, while the spreads between US and international flat rolled steel prices are quite high, they are relatively lower in some long products. Another thing to consider would be the recent consolidation in the rebar market after Commercial Metals Company (CMC) acquired some of Gerdau’s (GGB) US rebar operations.
We could see some traction in long steel prices also after the formal imposition of steel tariffs. Meanwhile, Nucor could also see volume gains after the implementation of tariffs, which we’ll explore in the next article.