During an election year, steel becomes the focal point of political discussions in the United States

The result of the US presidential election and the possibility of reduced interest rates later this year are expected to significantly influence demand growth and lead to higher steel prices.

Amid Japan's proposed takeover of US Steel by Nippon Steel, steel has sparked intense political debate in the United States. Senators advocate for protective tariffs on metal imports from Mexico for national security, while President Biden stresses the importance of maintaining domestic ownership. Tensions rise as Biden campaigns for re-election against Donald Trump, who vows to block Nippon's acquisition if elected. Meetings between Japanese steel executives and the United Steelworkers union have been unproductive, with concerns raised about worker contracts, supply chains, and national defense. The Committee on Foreign Investment in the United States (CFIUS) investigates Nippon's acquisition of US Steel for potential national security implications.

Senators oppose Mexican imports

A group of U.S. Senators is advocating for the reinstatement of 25% tariffs on imports from Mexico, particularly in the steel industry. They introduced the Mexico Steel Industry Stopping Growth Act to Congress earlier this month. Currently, Mexican steel producers are exempt from tariffs due to the USMCA free trade agreement. Implementing tariffs could alleviate price declines by limiting the volume of materials entering the country, which has led to surplus inventory. The American Iron and Steel Institute (AISI) supports the senators' bill, and market participants anticipate the tariffs to be applied temporarily for 12 months.

Rising rebar volumes

Data from the American Iron and Steel Institute (AISI) revealed that in January, Mexico ranked as the third-largest source of US steel imports, with volumes increasing by 36% from the previous month to 396,000 short tons. However, preliminary 2023 import data showed an overall decrease of 21.1% in imports from Mexico compared to the previous year, totaling 4.2 million short tons.

Import volumes of rebar and semi-finished products notably surged by 1,732% and 108%, respectively, compared to the 2015-2017 period used to determine USMCA terms. Steel buyers expressed concerns , stating that applying Section 232 tariffs to Mexican imports would render them economically unviable. Despite this, in a market where supply exceeds demand, the potential loss of Mexican imports may have a limited impact on prices.