Mills Set the Stage for Price Increases
For the past ten weeks, Nucor’s pricing has remained steady at $750 per ton, with spot buys coming in significantly lower at $700 to –$720. However, recent developments indicate that prices are poised to climb. On January 27th, Nucor increased its pricing to $760 per ton, and further hikes are expected. This projection is supported by a tightening of mill order books over the past two months, with mills favoring spot purchases over contract allotments. Additionally, scrap prices have increased by $20 per ton, reinforcing the likelihood of an imminent price rise. Most mills have already closed their February order books and are now booking orders for March, signaling a strong position for further price adjustments.
Utilization, Lead Times, and Supply-Driven Concerns
Mill utilization dipped slightly this week to 73.8% compared to 74.5% the previous week. Despite this weekly decline, utilization remains three percent higher than the same period last year. Lead times currently average three to five weeks for hot rolled coil and seven to eight weeks for cold rolled and galvanized products. The addition of new galvanized capacity in the market has also created tighter availability for cold rolled coil. However, there is growing concern that these price increases are being driven more by supply limitations than genuine demand growth, as no major market segment has shown a significant uptick in activity to date.
Economic Outlook: A Gradual Recovery
The broader economy continues to recover gradually, although challenges persist in the housing market, consumer spending, and business investments. Mortgage rates have peaked at 7%, and existing home sales in December 2024 were 20% lower than in 2019. High interest rates are deterring consumers from making large purchases, such as homes and vehicles, while businesses and farmers remain hesitant to invest in new equipment due to the high cost of financing. Freight costs are also expected to increase in 2025. While spot pricing for trucks softened in the fourth quarter due to weak demand, contract freight rates are projected to rise by 3 to 5%. In addition, rising fuel costs in Europe and ongoing concerns about the Suez Canal are driving up global shipping costs. Inflation for rail freight is expected to increase by 2.5% this year, with trucking and water freight costs following a similar upward trend.
Although the truck and trailer industry does not anticipate a meaningful increase in production volumes until 2026, the second half of 2025 is expected to see a modest uptick. While 2025 may feel like a transitional year, the gradual pace of recovery is likely to promote sustainable long-term growth. The United States remains the strongest global economy based on 2024 figures, offering a foundation for optimism even amid slower growth.
Industry Impacts: Tariffs and Executive Orders
Recent executive orders under the Trump administration are reshaping industry dynamics. The withdrawal from the Paris Accord has ended the mandate for electric vehicles, easing pressure on automotive companies to heavily invest in electrification. Many automakers, who faced substantial losses in 2024 due to sluggish EV sales, are cautiously optimistic that scaling back R&D in this area will improve profitability. In addition, the administration’s decision to halt wind farm construction eliminates a niche market for steel plate, but signals increased investment in fossil fuels, automotive production, and construction. These developments are expected to drive higher steel consumption in key industries.
Tariff Impacts Across North America
In North America, Canada and Mexico, mills remain cautiously optimistic about the outlook for their steel industries. Canadian mills are operating on a month-to-month basis, adjusting their strategies in response to market conditions. Meanwhile, Mexico is focusing on strengthening domestic production to navigate ongoing tariff challenges and position itself competitively in the regional market.
Closing Thoughts
Although 2025 is shaping up to be a slower year with only modest improvements in production volumes, the measured pace of recovery could ultimately lead to stronger market longevity. With mills tightening supply and the economy adapting to shifting conditions, the stage is set for a resilient and sustainable steel market in the years to come.