Steel price increases support financial performance of US mills

A recent analysis by MEPS International indicates that rising steel prices are contributing to improved financial stability for U.S. steelmakers, following a challenging period of declining profit margins in 2024. This press article draws on MEPS’ industry expertise and insights into global steel markets and financial trends.

The recent financial resilience of U.S. mills comes as the federal government implements renewed trade protection measures, including the reinstatement of 25% Section 232 tariffs on all steel imports. The administration’s stated goal is to promote domestic investment, reduce reliance on foreign steel, and increase capacity utilization within the U.S. sector to 80%.

Financial health remains strong post-pandemic

MEPS analysis shows that, despite market pressures in 2024, the U.S. steel industry has maintained a relatively strong financial footing. Profit margins surged during the Covid-19 pandemic, with figures averaging 13% between 2021 and 2023—peaking at 21.2% in Q3 2021. This was a marked contrast to the 2001–2019 average of just 1.3%.

By Q4 2024, margins declined to 1.8% due to softer demand and lower prices. However, this figure still exceeds the long-term pre-pandemic average. MEPS notes that the industry used pandemic-era profits to build cash reserves and invest in capacity, rather than accumulate debt. As of late 2024, steelmakers held nearly USD 10 billion in cash, representing 5.5% of total assets—higher than the historical average of 4.4%.

Furthermore, the sector's long-term debt-to-equity ratio stood at 0.308, only modestly higher than the 24-year low of 0.268, reflecting continued financial discipline. Between 2022 and 2024, the industry added over 10 million tonnes of new capacity, with a further 4–5 million tonnes expected in the next year.

Steel prices could bolster margins

MEPS forecasts that recent price increases will help stabilize the industry's profit margins in the coming months. Flat steel product prices have risen by over 40% year-to-date, and while some softening is expected in the second half of 2025, prices are still projected to end the year about 25% higher than in January. Long product prices are also rising, albeit more gradually.

Earnings guidance from major producers reflects cautious optimism. Nucor, the largest U.S. steelmaker, issued lower-than-expected but positive profit estimates, while U.S. Steel anticipates a second consecutive quarterly net loss.

Investment outlook remains mixed

Despite strong fundamentals, MEPS analysts suggest that U.S. producers may be reluctant to pursue further capacity expansion in the near term. This hesitation is linked to recent large-scale investments, as well as uncertainties surrounding the permanence of tariff measures and the broader economic environment.

The government, meanwhile, is encouraging foreign direct investment. A new “fast-track” approval system targets investors from designated allied countries and offers expedited environmental reviews for projects exceeding USD 1 billion. Hyundai Steel, for example, has announced plans to build a new electric arc furnace (EAF) facility in Louisiana, which will produce 2.7 million short tons of automotive-grade steel annually.

MEPS concludes that while the financial outlook for U.S. steelmakers is currently positive—supported by price increases and prudent fiscal management—uncertainty regarding trade policy and economic conditions may limit the pace of future domestic investment.

Source: MEPS, Photo: Fotolia