US hot-rolled coil (HRC) buyers expect spot market and contract supply shortages present at the start of 2026 to bleed into the second quarter, if not longer, as many of the driving issues behind the shortages show little sign of improving.
US HRC buyers entered 2026 expecting some tightness in spot supply after mills obligated more production capacity to contract supply compared to 2025. Most buyers believed it would not be a problem because the increased contract volume from mills was expected to cover buyers' needs in the face of soft demand expectations.
Buyers have since said demand remains manageable, but supply problems are more severe than anticipated.
Many mills overstretched their supply commitments trying to soak up market share that was vacated by foreign supplies after tariffs squeezed out many imports. This has meant the enhanced contract supply that customers were expecting has not always materialized. Mills are delaying deliveries by over a month in some cases and switching customers to the minimum volumes that contracts allow in order to juggle order books.
Buyers have searched for spot availability to make up for late contract deliveries, but planned and unplanned production issues have made that difficult, as well.
Argus data bears out the shift over the last few months. Total HRC spot transaction tonnage used for Argus assessments fell to 9,002 short tons (st) in February, down from 14,397st in November 2025, when several buyers were restocking ahead of 2026. Tonnage declined every month from November to February.
Market participants booked only 51 spot transactions in February and 45 in January, the lowest marks since March 2025. Transactions have been increasingly concentrated across a narrower band of participating mills as 2026 has progressed.
Tight supply of steel slabs, which are converted into HRC, has made production more difficult for some mills. Some US slab suppliers have suffered operational disruptions, while Cleveland Cliffs did not renew a slab supply contract with ArcelorMittal after 2025, forcing ArcelorMittal to seek alternatives.
Planned maintenance is also playing a role. US Steel has a 100-day outage at its Gary Works site in Indiana to complete a planned reline at the site's No 14 blast furnace, which converts iron ore pellets into iron for high-strength steel production. The outage begins in May, but many buyers expect spot HRC availability to be tight from US Steel in the meantime as the company prioritizes building inventory to last through the outage.
Buyers did not sufficiently build up HRC inventory in late 2025, when domestic and import spot volumes were available. Mills warned availability would be tight in early 2026 as they tried to manage new contract commitments, but many buyers were wary of driving a spot buying frenzy that would spike prices and bloat inventory only to struggle selling those volumes in a weak demand environment.
Imports were not viewed as necessary for the same reason because imports from East Asia or the Middle East would reach US ports long after many buyers expected domestic supply tightness to end. Tariffs on foreign steel imports also made Canadian steel that could arrive quicker too expensive.
Buyers have since tried to pivot, but there are now no quick fixes available. HRC import orders that buyers placed in late January and February will still take months to reach the US. While orders have picked up from late 2025, importers said they still pale in comparison to historical averages.
Import licenses, an indicator of incoming steel imports, totaled 120,957 metric tonnes (t) across January and February, according to the US International Trade Administration. That is down 63pc from the 322,562t imported during the same two months in 2025, just before steel tariffs were re-implemented by President Donald Trump.
Buyers looking for domestic spot volumes to cover short positions are faced with lead times between six to eight weeks from a limited number of mills that have supplies to sell.
The result is a tight domestic supply environment that is now expected to bleed through the second quarter until imports arrive and maintenance concludes.
That may only be a partial remedy as the over-commitments on contract volumes will still leave the market tighter than last year.
