Market Update | January 22, 2025

 

PRESIDENT TRUMP ANNOUNCED PLANS TO IMPOSE 25% TARIFFS ON IMPORTS FROM MEXICO AND CANADA AS EARLY AS FEBRUARY 1

President Trump said on his first day in office during an Oval Office signing ceremony that his administration is planning to impose 25% tariffs on Mexican and Canadian imports as soon as February 1. He also said his administration is not yet ready to impose universal tariffs. As a reminder, the U.S. receives about 40% of its imported steel from Canada and Mexico and sends 90% of its exported steel to those two countries. The 25% tariffs on Canada and Mexico are likely to support steel prices.

 

PRICE

While the outlook remains mostly positive for future pricing movement, pricing for domestic sheet pricing held virtually flat once again this week.

  • The recent increase in domestic prime scrap pricing and clarity around initiatives from the new administration may provide the jumpstart the market has long desired to boost finished steel pricing momentum.

 

Input Costs

Zinc pricing rebounded slightly this week now up for the second consecutive week.

  • Pricing came in at $1.32/lb this week, up from $1.30/lb last week.

 

Spot iron ore pricing rebounded this week after hitting a four-month low two weeks ago.

  • The current pricing, $112/mt, went up from $109/mt last week.

 

Coking coal pricing started the year on a weaker note as well, sliding to $188/mt
from $194/mt last week.

  • Prices are down 3.1% from last week and are down 4.3% from this time last month and down
    a sharp 43.5% compared to this time last year.

 

SUPPLY

U.S. raw steel production declined last week after now down for the third time in the last four weeks.

  • U.S. steelmakers produced 1.644 million tons at a 73.8% utilization rate, down from 1.659 million tons last week.
    • Production was down 0.9% from last week but up 0.9% from the same week last year.
  • YTD (only this week) production is up 1.1% from the same timeframe last year.

 

President Trump said in a Day 1 Oval Office signing ceremony that his administration is planning to impose 25% tariffs on Mexico and Canada imports as soon as February 1.

  • He also said his administration is not yet ready to impose universal tariffs.
  • As a reminder, the U.S. receives about 40% of all steel imports from Canada and Mexico and sends about 90% of all exports to these two countries.
    • The 25% tariffs on Canada/Mexico would likely offer some support to steel prices.

 

DEMAND

Domestic light vehicle production ended the year on a soft note.

  • U.S. light vehicle production totaled 641,099 units in December, down 21.3% from November and 13.6% from 742,289 units in December 2023.
    • This was the second consecutive month in which light vehicle production declined on a year-over-year basis.
  • December production came in at a 20.7k units/day rate, the lowest rate since July 2021.
  • While production of both cars and light trucks declined, the production of cars saw a much sharper decline.
    • U.S. car production totaled 79,739 units in December, the lowest monthly total since May 2020.
  • Despite the weak ending to the year, total light vehicle production for 2024 (10.4 million units) was up 1.2% from 2023 and was the highest annual total since 2019.

 

President Trump has signed an executive order ending the Biden-era EV target of 50% electric vehicle sales by 2030, as well as revoking unspent government funds for charging stations.

  • The order also ends a waiver which allowed states to ban combustion engine (ICE) cars by 2035, and also asks the EPA to terminate emissions legislation which limits ICE sales (although it is not yet clear if emission legislation can be changed through executive order alone).
  • IRA tax credits of up to $7500 remain in place for now, although Trump has expressed a desire to repeal the IRA in the past – something which may give EV sales an unexpected boost in the coming months.

 

 

This material, information and analyses (the “Content”) may include certain statements, estimates and projections prepared with respect to, among other things, historical data and anticipated performance.  Content may reflect various assumptions by Majestic Steel USA, Inc. concerning anticipated results that are inherently subject to significant economic, competitive and other uncertainties and contingencies and have been included for illustrative purposes. Content is provided AS-IS.