US plate prices hit $44/cwt on Section 232, supply shortage fears

Plate prices continue to skyrocket in the United States on concerns that limited supplies - and potential shortages - could result from President Donald Trump’s decision to set a 25% tariff on steel imports under Section 232.

American Metal Market’s price assessment for cut-to-length plate now stands at $44 per hundredweight ($880 per ton), up 4.8% from $42 per cwt ($840 per ton) previously and up 24.8% from $35.25 per cwt ($705 per ton) a year ago.

Lead times are solidly into May, market participants said, and some mills don’t have spot tons because they are busy with energy-related projects. The result: In some cases, mills are guaranteeing prices for only one to two days, sources said.

Plate prices last stood at $44 per cwt more than three years ago in September 2014; that figure also marks the price’s peak for that year, according to American Metal Market’s price records. Plate demand and prices subsequently crashed on a collapse in energy prices, with the decline continuing through 2015.

“It’s crazy out there,” one mill source said. “The inquiry level from customers is high, and there are no supplies - so the lead times have pushed out.”

That’s in part because import volumes were already depressed before Trump made an impromptu announcement last week that he would slap all steel imports with blanket 25% tariffs.

Peter Navarro, director of the White House National Trade Council, indicated that there would be no exemptions for US allies such as South Korea, nor for North American Free Trade Agreement partners Canada and Mexico.

Trump decided to implement tariffs “across the board and with no country exclusions,” Navarro said during an interview with CNN on Sunday March 4. “As soon as you exempt one country, then you have to exempt another country - and so it’s a slippery slope.”

The US was licensed to import 32,587 tonnes of plate in February, according to US Commerce Department figures last updated on February 27.

While data for the month is not yet complete, that figure represents the lowest volume for plate imports since at least December 2016. The top three suppliers of foreign plate last month were Canada (10,854 tonnes), South Korea (7,325 tonnes) and Mexico (5,916 tonnes) - together accounting for 73.9% of the February total.

If those trends in shipment and sourcing continue, and if there are no exemptions to the tariffs, nearly three-quarters of plate import volumes could be subject to punishing duties - even with relatively small volumes coming to US shores.

“I don’t think we want to be treating our neighbors to the north the way we’re treating them,” one Midwest distributor source said. In the meantime, the potential for strict trade actions under 232 has “everyone panicking,” he said. “Prices are going north, and we think we’re still not seeing the top... [because] everything is getting scarce.”

But it’s not yet clear how Trump will choose to implement his promised trade action. The president appeared to contradict his advisers with a tweet on Monday March 5 that suggested the threat of tariffs against Canada and Mexico was being used as a bargaining chip in Nafta negotiations.

“Tariffs on steel and aluminum will only come off if [a] new [and] fair Nafta agreement is signed. Also, Canada must… treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the US,” Trumped tweeted on Monday.

The president posted the tweet while another round of Nafta talks was being concluded in Mexico City.

But what could upset the market even more than the president’s tariffs would be if Trump confirmed only symbolic measures - reversing course and offering widespread exemptions, or even dropping the blanket-tariff remedy altogether. That could lead to even greater price volatility - this time on the downside, some sources warned.

“It would get crazier if Trump does not go through with Section 232. Saying is one thing, actually doing it is another story with this president,” one steel buyer said.

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