American steel prices are expected to reach $1,500 per ton by August or September 2026, marking an unusual nine-month rally. Hot-rolled coil, the industry benchmark, is currently trading near $1,100 a ton. This price surge is primarily driven by a supply shortage rather than a demand boom, with data center construction accounting for just over 1% of the market. Tariffs, specifically the 50% Section 232 tariff, have reduced steel imports by 25% year-to-date, and domestic mills are restricting customers to minimum contract tonnage, keeping spot tons off the market.
Geopolitical tensions, particularly the Iran conflict, have contributed to a 50% increase in diesel prices, a cost passed directly to buyers as freight surcharges. This further elevates delivered costs, even if the base metal price were to soften. Despite record US weekly steel production since March 2020, buyers are struggling to secure material, creating a seller's market where availability is a primary concern.
Looking ahead to 2027, analysts at the SMU Steel Summit in Atlanta presented varied forecasts. Josh Spoores of CRU expects contract prices to rise from approximately $800 per short ton in 2026 to $1,100-$1,175 per short ton in 2027, driven by current spot prices and potential supply shortages. Wells Fargo's Timna Tanners, however, predicts a more subdued peak in 2027 compared to 2026, forecasting hot-rolled coil at $1,000 per short ton. This forecast assumes limited changes to tariffs and an end to the Iran conflict, which would lower freight and fuel costs. A broad reduction to a 25% tariff could see hot-rolled coil prices between $800-$1,000 per short ton.
S&P Global Market Intelligence's John Anton highlighted that US steel prices are the highest globally due to protectionism, with demand not being the primary driver. He noted that even with the 50% Section 232 tariff, Asian prices remain significantly lower. Anton anticipates data center capacity additions to peak in 2028 and automotive component demand to remain soft into 2027. He emphasized that without buyers turning to imports, prices are unlikely to decrease. Overall, analysts expect the current rally to peak, with many conference attendees predicting lower steel prices in a year, largely due to potential increases in imports and domestic supply balancing out the market.
