US Steel Industry Sees Economy Reviving Demand in 2025

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(Bloomberg) — U.S. steel executives say they’re optimistic that demand for the industrial material will rebound next year, recovering from weak demand and low prices that hobbled the industry in 2024.

Several industry leaders who gathered at the SMU Steel Summit in Atlanta earlier this week said they have high hopes for 2025. They see a turnaround driven by an improving U.S. economy, with massive infrastructure projects under construction and lower interest rates encouraging consumer spending.

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“If the economy is good, if people are going out to buy washing machines, cars, homes and build commercial buildings, that’s really good for us,” said Mike Barnett, president of Grand Steel Products, a steel services company based in Wixom, Michigan.

The U.S. steel industry has been dominated this year by Nippon Steel Corp.’s proposed takeover of United States Steel Corp., the country’s largest producer. The $14.1 billion deal, which has become a political hot button after opposition from President Joe Biden and union workers, is driven by the Japanese company’s optimism for more growth in the United States.

But while government incentives have the potential to boost spending on major energy projects, higher borrowing costs have weighed on manufacturing and economic growth. Steel demand in the first half of this year was 50.9 million tons, about 0.4 percent lower than the same period last year, according to data from the American Iron and Steel Institute.

Benchmark U.S. steel futures are down 37% year-to-date, and earlier in the summer hit their lowest levels since December 2022.

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The US Federal Reserve’s indication of a rate cut in September would raise the prospect of a turnaround for steel-dependent sectors.

“We expect demand to grow domestically here from the construction sector, with all the investment being driven by government policy over the past few years,” Kevin Dempsey, president of the American Iron and Steel Institute, said in an interview.

Among those laws is the Biden administration’s Infrastructure and Investment Opportunity Act of 2021, which includes mandates for projects to be built using American steel. Jeff Gilmore, CEO of Columbus, Ohio-based Worthington Steel, said the law includes $550 billion for projects that use steel — about 50 million tons of the material.

“This will certainly be a big boost to the sector,” he said in an interview.

Despite the optimism, Alexandra Anderson, CRU’s chief steel analyst, still sees challenges ahead for the industry. New steel capacity is also set to come online in the coming months in the U.S., including U.S. Steel’s new Big River 2 mill in Arkansas, which threatens to outpace demand growth.

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According to the American Iron and Steel Institute, U.S. crude steel production rose 1.1% last year to 89.7 million net tons.

U.S. industry also faces ongoing trade issues, including low global prices due to a glut of Chinese steel and an influx of cheap foreign steel despite protective tariffs. Another factor that could shake things up is the U.S. presidential election, where Vice President Kamala Harris is running against Republican nominee Donald Trump.

“It’s a feature of the US election that investors are a bit nervous and cautious ahead of the election,” said Tom Price, chief commodities analyst at Panmure Liberum. “Whether it’s Trump or Harris, there will be a rally in prices after the election.”

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