USA:  July 31:  WSD Take: USA Prices Likely to Remain Soft in August

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As we move into the dog days of summer, the steel market appears to have entered its own period of stagnation. After two months of relative stability—with hot-rolled coil prices hovering between $870 and $900 per ton—recent weeks have brought noticeable softening. WSD contacts report that large volume buyers are securing discounts well below $800 per ton, a clear sign that momentum has weakened. Still, we expect spot prices to stabilize above $825 per ton over the course of the current cycle.

The greatest potential for upside entering August was the potential of inflated pig iron costs, as a proposed 50% tariffs on all Brazilian exports to the United States threatened approximately 4 million tons of key EAF raw materials. With the tariff being reduced to 10%, the potential for substantial increases in scrap settlements in August has diminished significantly.

The real headwind facing steel today is not cost, but demand—or the lack thereof. Automotive, construction, and appliance sectors are all signaling weakened end-user activity. Construction spending, outside of the booming data center segment, continues to trend downward. Absent a significant improvement in steel demand in the coming months, the greatest upside risk in the coming months may be a result of mills pulling back capacity amid the typical fall maintenance schedule. If buyers are caught with low inventories during this period, the potential for a $50-75/ton improvement in HRC prices is likely.

Meanwhile, import volumes are likely to remain constrained. Despite a wave of new trade deals in recent months, there has been no meaningful relief on the 50% Section 232 steel tariffs, which continue to keep foreign steel largely sidelined. Without additional exemptions, import pressure is expected to remain minimal, leaving the potential for tight supply demand conditions later in the year. For now, however, the market is in a holding pattern. With demand soft, we expect hot-rolled coil prices to hover in the mid-$800 range in the coming weeks

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