US flat steel buyers are working through contract talks with mills for 2027, but mills' prioritization of reducing backlogs has left some buyers fearful that contract commitments for next year will be reduced or even cut entirely.
Before negotiations begin in earnest, many steel market participants expected reductions to tonnage commitments for mills in 2027 compared with 2026 levels, according to a survey conducted by Argus.
Early negotiations between domestic mills and buyers have largely aligned with the survey's listed expectations.
Several mills aim to cap or reduce 2027 contract supply commitments to free up some capacity and address widespread order backlogs that lasted throughout all of 2026. Once the backlogs are cleared, most mills intend to use the freed capacity to participate more heavily in the spot market, in which backlogs have kept most mills from participating through much of late 2026.
Some are proposing cuts while others are simply scrapping min-max ranges, which allow buyers to flexibly adjust between a high and low level of supply each month that all falls under the same contract price. These mills instead are pushing buyers to commit to a fixed tonnage amount for the year and any additional supply requirements beyond the allotted contract will be addressed on the open market.
Some buyers have struggled to get mills to answer calls or agree to even begin negotiations, spurring fears that mills may also reshuffle their customer pool to shrink contract commitments. Some large service centers reported losing a mill or two from their typical network of suppliers for 2027, while smaller buyers and those that require more niche production specifications worry that in such a reshuffle their businesses may not have any designated supplier.
Even buyers that have locked in contracts worry that mills' pivot to the spot market will take a while to materialize because order backlogs will take months to clear, all while much of the market is anticipating modest to substantial demand growth in 2027.
The reduction in domestic supply assurances has pushed more buyers into the overseas market, but foreign mills have had availability issues as well because US customer needs have not always aligned with rolling schedules.
Still, even some US mills admitted that imports may have to play a larger role in the US supply mix through the end of 2026 and start of 2027 compared with recent trends because domestic mills will be tight on supply for the foreseeable future. Some buyers said it will be almost impossible to grow business in 2027 without imports.
Major companies like Nissan, Worthington and Reliance all said in recent comments to Argus or in public earnings calls that low domestic steel supply was limiting or threatens to limit their US operations.
Service centers told Argus that downstream customers were not aware of how dire the US steel supply situation was getting, and that service centers were already getting creative sourcing from foreign mills and fellow service centers to paper over the cracks forming ahead of 2027.
US steel buyers trying to organize 2027 supply are thus left to cobble together a mix of reduced domestic contract supply, spot volumes that are not assured in the short term and foreign steel that takes months to arrive to US ports if it is available.
Some buyers have argued the only alternatives are shutting down lines, laying off shifts or letting downstream customers bear those costs instead.
