Auto strike risk looms over US steel market

Market: Coking coal, Metals, Pipe and tube
24/08/23

The possibility and potential widespread problems caused by an automotive union strike was the topic of most conversations at the largest US steel conference of the year.

Steel market participants at the SMU Steel Summit in Atlanta this week broadly agreed that some type of strike by the United Auto Workers (UAW) union would happen against some portion of Ford, General Motors and Stellantis.

The UAW contract expires on 14 September and a strike at any of the automakers could add thousands of tons of steel into the spot market. The union was scheduled to vote to authorize a strike today with results to be announced on Friday.

Wolfe Research managing director Timna Tanners said on 21 August in Atlanta that her firm's analysis was that a short-lived strike at a single automaker would cost steel demand equivalent to 90,000 short tons/month.

There remains uncertainty over how broad or long an auto strike will be, with UAW president Shawn Fain refusing to choose a single company to target for a strike, keeping open the possibility of a broad strike against all three major US automakers.

Speaking in Atlanta Zekelman Industries chief executive Barry Zekelman agreed that a strike would likely happen.

"[Pricing] definitely is coming off and I think it will level off, absent an auto strike, which I think there will be," Zekelman said on 21 August. "Why wouldn't there be? You have two organizations that are fighting for a strong position."

Demand from the auto industry remains among the strongest pullers of steel as auto companies work to fill up dealer lots ahead of the possible strike.

Service centers are reporting that demand broadly remains steady, with some downstream consumers experiencing slowdowns.

Many have noted that the flat steel market is oversupplied, with integrated steelmaker US Steel reporting production of 671,000st more steel than it shipped in the first half of the year at its US-based integrated and electric arc furnace (EAF) flat steel mills. While it is normal for steelmakers to produce more steel than they ship, the gap between the two metrics has widened this year at some companies.

During the same period, EAF steelmaker Steel Dynamics (SDI) said it produced 5.84mn st from its flat and long product steel mills, 301,000st higher than its external shipments.

Other EAF competitor Nucor reported its steel mills produced at 79pc and 84pc utilization rates in the first and second quarters, respectively, putting its sheet mills at a calculated production volume of 5.62mn st in the first half of the year compared with sheet shipments of 5.61mn st.

Integrated steelmaker Cleveland-Cliffs does not publish its production volumes or its utilization rates. The company is aiming to increase its 2023 shipments by more than 1mn st compared with 2022.

How US steelmakers would react to an automotive strike is an unknown, including whether any steel mill assets would be idled to reduce supply in response to the drop in demand.

When US automakers shut down in 2020 as the US economy shuttered in response to the Covid-19 pandemic, more than 20mn st/yr of blast furnace steel production went idle in response and EAF steelmakers operated at reduced rates. The idled furnaces took many months to restart, leading to record high flat hot rolled coil (HRC) spot prices in 2021 that hit $1,970/st.

The Argus US HRC Midwest and southern ex-works assessments were at $760/st on 22 August.

By Rye Druzin

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

15/01/25

OECD highlights Chile’s green transition potential

Santiago, 15 January (Argus) — The energy transition holds the potential to boost Chile's stagnant economic growth, the Organization for Economic Cooperation and Development (OECD) said in a report published today. Chile's high renewable energy potential and "vast" lithium and copper reserves put the country in the right position to benefit from the switch to cleaner energy, according to the OECD Economic Survey of Chile 2025. But the country must simplify regulation, boost investment, upgrade electricity transmission and port infrastructure, and increase carbon prices to meet its climate targets and harness the benefits of the energy transition, it said. Chile's massive renewable energy potential is built on its OECD-leading photovoltaic power possibilities and the world's best onshore wind resources in the Magallanes region in the far south, it noted. It needs to streamline permitting processes that often exceed legal permit reviewing times, making "investment approvals costly and lengthy," it said. Chile's tax on carbon emissions of $5/t of CO2e is low by international standards and insufficient for the country to meet its emission reduction targets, the report said. The country plans to increase the tax to $10/t on sites that emit more than 25,000t/yr of CO2. The OECD also highlighted the country's need to ensure fiscal sustainability, foster women's participation in the labour market and accelerate productivity through digitalization and innovation to bolster growth. The country's income convergence with more advanced OECD economies has stalled since 2012, it said. GDP rose by 2.4pc in 2024, up from a 0.3pc increase in 2023, on the back of postpandemic "adequate macroeconomic policies". By Emily Russell Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

Hyundai eyes new southern US steel mill

15/01/25

News

15/01/25

Hyundai eyes new southern US steel mill

Houston, 15 January (Argus) — South Korean steelmaker Hyundai Steel has confirmed it may build a new steel mill in the southern US. A company spokesperson said in an email Hyundai Steel is reviewing whether it will invest in an electric arc furnace (EAF) steel mill, but that the project has not been confirmed yet. Hyundai Steel has 24mn metric tonnes (t) (26.5mn short tons) of steel production, all in South Korea. That production is split 50-50 between blast furnace and EAF steelmaking processes, according to the company's website. The blast furnaces serve the automotive, construction, and shipbuilding industries with steel sheet, plate, and welded pipe, while the EAFs produce rebar, H-sections, and other products for construction and shipbuilding. If the mill is built it would be Hyundai Steel's first outside of South Korea. There are eight EAF and re-rolling flat-rolled steel mills in the southern US operated by different steelmakers that have a combined 23.8mn t (26.25mn st)/yr of production capacity. The spokesperson did not clarify what products the mill would produce or what industries it would supply. Hyundai Steel's parent company, Hyundai Motor Group, operates a nearly 400,000 vehicle/year automotive plant in Alabama. Hyundai Motor Group's subsidiary Kia has its own 350,000 vehicle/year auto plant in Georgia. President-elect Donald Trump has threatened to impose blanket tariffs on US imports after he assumes office on 20 January. Hyundai announced more than $10bn of investments in the US in May 2022, including a $5.5bn new electric vehicle (EV) and battery manufacturing plant in Georgia that will have a production capacity of 300,000 vehicles. By Rye Druzchetta Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Tariff war is a lose-lose proposition: Canada

15/01/25

News

15/01/25

Tariff war is a lose-lose proposition: Canada

Calgary, 15 January (Argus) — Any retaliation by Canada to tariffs imposed by the US would be designed to apply political pressure, the country's energy minister said today in Washington, DC, but a potential tariff war between the two countries is a lose-lose proposition. "We are not interested in something that escalates," Canada's minister of energy and natural resources Jonathan Wilkinson said in a panel discussion at the Woodrow Wilson Center. But until tariffs are imposed, Canada does not know how it will need to respond. Canada will likely focus on goods that are "important to American producers," but also those for which Canada has an alternative. "The point in the response is to apply political pressure," said Wilkinson, who advocated for stronger trade ties between the two countries byway of energy and critical minerals. US president-elect Donald Trump plans to impose a 25pc tariff on all imports from both Canada and Mexico when he takes office on 20 January. So far he has not signaled any plans to exempt any goods, including oil and gas. Alberta's premier Danielle Smith and now Wilkinson are promoting the flow of more crude to ensure North America's energy security. "We can enhance the flow of Canadian crude oil from Alberta," said Wilkinson by boosting capacity on pipelines like Enbridge's 3.1mn b/d Mainline crude export system. "The US cannot be energy dominant without Canadian energy." The incoming administration would be open to such pipeline expansions, said Heather Reams, president of Washington-based non-profit Citizens for Responsible Energy Solutions. "It's something that the Trump administration and Republican members in Congress would be interested in revisiting to ensure that there is a steady flow of the energy that's needed to fuel our mutual economies," Reams said on the panel. Enbridge's Mainline moves Canadian crude from Alberta to the US Midcontinent, where Wilkinson expects consumers will be faced with higher gasoline prices — adding as much as 75¢/USG at the pump — should tariffs be imposed. Americans could also see higher food prices if tariffs are put on potash, a fertilizer mined in Saskatchewan and used by US farmers, she said. Development of critical minerals like germanium, gallium and others should be pursued further to minimize the US' exposure and dependence on China, according to Wilkinson, echoing comments made by Ontario premier Doug Ford on 13 January in his own appeal to enhancing trade ties with the US. "We cannot be in a position where China can simply manipulate the market," said Wilkinson, citing that country's dumping of nickel. "We should form a true energy and minerals alliance." By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Risks leave EU buyers with limited HRC options

15/01/25

News

15/01/25

Risks leave EU buyers with limited HRC options

London, 15 January (Argus) — Impending tighter EU import trade measures, coupled with an unfavourable exchange rate, have stymied buyers' options for hot-rolled coil (HRC) to mostly just domestic and Turkish material. As a result, import volumes between February and June are likely to fall, with very limited trade occurring over the previous quarter. Import trade at the start of January is continuing at a very slow pace, and quota data show January arrivals were already considerably lower than in previous quarters. Exports from Asian suppliers to the EU over the last months of 2024 appear to have dropped, according to available Global Trade Tracker data. In November around 250,000t of HRC was exported from South Korea, Taiwan, Indonesia, China, Australia and Japan to the EU. Most of that will be likely to arrive and clear in the current quarter, as Indonesia and China are exempt from the safeguards, Australia has ample quota availability and South Korea's allocation is regulated. Under 50,000t of what was exported in November, most of which was from Taiwan, is likely to be clearing in April, as it is possible that it did not make it in time to go through customs in January duty-free. November data for large historical suppliers India, Vietnam and Ukraine are not yet available, but volumes from the former two have dropped because of the ongoing anti-dumping investigation. The probe has further stopped the flow from Egypt and Japan. "I don't think EU will buy material from India until 25 March as future duties are not clear," a producer said. "We will all be very cautious — if someone is taking the risk without knowing the anti-dumping rate for the origins under investigation, it is quite a crazy decision," a buyer said. Exports to the bloc from many suppliers are unlikely to resume until there is more clarity on the dumping investigation and the safeguard review. Mills under scrutiny have expressed expectations of duties at 8-10pc, but some traders and buyers say tariffs could be similar to those on China, especially for Vietnam. Import data show that in April last year 1.4mn t of HRC was imported into the EU. Of that amount, Argus estimates over 1mn t could be affected by upcoming trade measures, and around 300,000t worth of supply — from Turkey, Ukraine, South Korea and Serbia — would today be deemed less risky by buyers. While it is likely that those countries could ramp up their exports over the first half of this year, and in fact have already started doing so, there are limits to how much each can supply — be it because of country-based quotas, existing duties, or in Ukraine's case limited production. The safeguard review is likely to see duty-free quota volumes reduce too. In October those four countries supplied around 500,000t to the EU. In January so far, quota data show only 50,000t cleared from Turkey, South Korea and Serbia. Currently, the weaker euro against the US dollar is making imports, even from the above countries, unfavourable, so purchasing is scant. Demand remains a big question. "Buyers are sceptical about demand recovery and inventories are often on the high side leaving buyers some time before returning to the market," a trader said. Despite continued slow demand at the start of the year, reduced import supply will reduce availability in the bloc, which could ultimately boost prices. The Argus northwest EU and Italian HRC indexes have already started moving up since around mid-December, up by €25.75/t and €11.75/t, respectively, as of 14 January. "At the moment EU supply, as well as from Turkey, is more than adequate. For this reason I really doubt that buyers will take many risks. That situation is badly affecting imports but for sure is helping EU producers to defend current prices in a stagnant market in terms of apparent demand," a buyer said. "I would expect lack of material, as no-one is willing to take the risk of a cif purchase from those [higher] risk countries and, and Turkey and the EU may not be enough," a third trader said. By Lora Stoyanova Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US inflation gains, core prices ease in December

15/01/25

News

15/01/25

US inflation gains, core prices ease in December

Houston, 15 January (Argus) — Headline inflation quickened to an annualized 2.9pc in December from a year earlier but core inflation slowed for the first time since August. The acceleration in the consumer price index (CPI) last month compared with 2.7pc in November, according to the Labor Department. Analysts surveyed by Trading Economics had forecast gains of 2.9pc. Core inflation, which excludes volatile food and energy, slowed to an annual 3.2pc from 3.3pc the prior month. It came in under analysts' forecasts of 3.3pc. Traders raised the probability the Federal Reserve will cut its target rate at the June meeting to about 66pc odds from about 58pc Tuesday, according to CME's FedWatch tool. The Fed in December penciled in two likely quarter-point cuts this year but strong job growth and signs of inflation reigniting have been pushing any likely move back later into the year. The energy index contracted by an annual 0.5pc in December, compared with a 3.2pc decline in November. The gasoline index fell by 3.4pc last month compared with an 8.1pc decline the prior month. Energy services rose by 3.3pc following a 2.8pc gain in November. Services less energy services, considered a core services measure, rose by an annual 4.4pc in December after a 4.6pc gain the prior month. Shelter costs rose by an annual 4.6pc following an annual 4.7pc gain the month prior. Food rose by 2.5pc after a 2.7pc gain. Transportation services rose by an annual 7.3pc in December. For the month, the CPI rose by 0.4pc following a 0.3pc gain in November that followed four months of 0.2pc gains. Energy rose by 2.6pc in December from the prior month, accounting for 40pc of the monthly headline gain, after rising by 0.2pc in November. Core inflation slowed to a monthly 0.2pc gain after four months of 0.3pc gains. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more