US steel tariffs lead to oversupply of scrap

The first of two price increases at scrap metal dealers this year occurred when winter weather conditions limited supplies nine months ago.

SEATTLE (Scrap Monster): North American ferrous scrap dealers and exporters are likely to continue flooding the U. S. market in 2026 as the tariff-protected U.S. steel industry is on track to displace international scrap markets.

The magnetic attraction of the U.S. steel market this year has attracted large volumes of ferrous scrap shipments from both domestic and international shippers, a trend that could continue to increase U.S. scrap shipments and have an impact on prices in 2026.

'Tariffs protect the U.S. steel and aluminum industries and, consequently, domestic demand for scrap,' Stephen Mikkelsen, chief executive of global metal recycling business Sims Metal, said during an August earnings call. 'This has led to the fact that surcharges often occur when selling scrap metal on the domestic market in the United States.'

President Donald Trump's 50 percent tariffs on imported steel have helped boost U.S. steel mills' production numbers. The import tax has also protected the U.S. market from an oversupply of Chinese steel on the global market. This dynamic has prompted dealers to sell duty-free ferrous scrap more often to U.S. steel mills rather than the offshore market.

'We expect this to continue in fiscal year 2026. In our opinion, changes in production will take time, and China will continue to reduce steel prices and, consequently, prices for ferrous scrap outside the United States,' Mikkelsen added.

The recent divergence in steel prices in the United States and Turkey suggests that American exporters may still prefer supplies to China. in the domestic market in the first quarter. Prices for flat and long products in the United States continued to rise in December. Turkish rebar fell to $559 per ton, which is $18.50 per ton less than on December 4.

Participants in the ferrous scrap market in the United States expect prices to rise in January due to a slowdown in supplies during the winter season. But the long-term trend of higher steel tariffs, contributing to an increase in the supply of ferrous scrap in the United States, is likely to continue in 2026 and will continue to hinder significant price increases.

Trump has shown no interest in lifting steel tariffs, which likely indicates that the U.S. market will continue to attract similar or larger volumes of scrap from domestic and international sources in 2026.

The first of two price increases at scrap metal dealers this year occurred when winter weather conditions limited supplies nine months ago. The second one happened this month under the same circumstances.

Sellers were counting on higher demand from steel mills.

 Courtesy: www.metallurgprom.com