50% Tariff as a Floor: US Stainless Steel Prices Remain Firm

1 Prices Steady with a Slight Increase, Supply-Demand Balance Maintained
In August, US stainless steel prices generally moved sideways, with the monthly metal index for stainless steel rising slightly by 1.69% between August and September. Notably, after several price increase announcements by steel mills in recent months, they not only succeeded in maintaining the benchmark price hikes but also reversed the historically high discounts seen in previous years. The 50% tariff has played a crucial role in achieving this outcome.

From a supply-demand perspective, although mill delivery cycles have lengthened compared to the beginning of the year, overall stability has been maintained, indicating no significant monthly fluctuations in market supply and demand. In terms of product availability, bright-annealed products and ferritic stainless steel are relatively tighter than austenitic stainless steel. However, procurement agents report no severe raw material shortages, especially for commonly used grades like 304, which remain adequately supplied.

While there have been no significant changes on the demand side, the 50% tariff has created a substantial market advantage for domestic steel mills. Even as US manufacturing has been in a prolonged contraction, domestic mills continue to expand production capacity. Additionally, although several manufacturers are relocating production to mitigate trade barriers, industry insiders widely believe that it will take time for this trend to have a tangible impact on US stainless steel consumption.

2 Trade Policy Dynamics: Market Faces Changes in Q4
Currently, US steel mills benefit not only from the higher price floor provided by the 50% tariff but also from procurement agencies’ growing preference for domestic raw materials. Despite overall market weakness in the US, manufacturers are actively mitigating procurement risks to prepare for potential market volatility triggered by trade policy adjustments or geopolitical events.

As the 2026 contract season approaches, market focus on pricing is intensifying. Suppliers generally believe that steel mills are unlikely to offer significant discounts. While the current market environment does not support further price increases, mills are eager to maintain existing price levels as procurement agencies lock in contracts.

Market divergences center on the post-contract signing outlook. Potential tariff quota agreements between the US and the EU and the UK could introduce new dynamics. Finnish stainless steel company Outokumpu pointed out that the European stainless steel market performed exceptionally weakly in the second quarter. If European stainless steel products gain tariff-free access to the US market, it would provide US buyers with more competitive options, potentially impacting the domestic market. Meanwhile, trade negotiations with Canada and Mexico are ongoing, and related agreements could bring new pressures to domestic mills.

It is worth noting that there are discrepancies in how the US and the EU describe the tariff quota agreement: European Commission President Ursula von der Leyen stated that it would "reduce tariffs and establish a quota system," while the White House explicitly stated that "sectoral tariffs on steel, aluminum, and copper will remain unchanged." This uncertainty adds complexity to the market outlook.

3 Capacity Expansion + Policy Variables: Market Dynamics Face Restructuring
Beyond trade policies, North American Stainless’s capacity expansion plans will also impact the market landscape. The company announced an upgrade and transformation of its Ghent production base in 2023, including the construction of a new cold rolling mill, roll grinder, skin pass mill, upgrades to annealing and pickling lines, and an expansion of the melting shop. The project is expected to be completed by the end of 2025.

Industry analysis suggests that if demand does not rebound and large-scale inventory replenishment does not occur, the dual factors of "potential quota agreements + US domestic capacity expansion" could give buyers more bargaining power in pricing. However, even if some countries reach quota agreements with the US, stainless steel products from Vietnam and Taiwan, China, will still face high tariffs and are unlikely to significantly impact the market.

4 Nickel Prices Remain Stable, Supporting Stainless Steel Cost Foundation
In contrast to the volatility in stainless steel benchmark prices, nickel prices have consistently moved sideways, keeping nickel surcharges relatively stable since early 2025 and providing cost support for stainless steel price stability. Although the nickel market remains oversupplied, the strong bearish momentum that drove prices down over the past two years has diminished.

The significant expansion of Indonesia’s nickel industry is one of the main reasons for the global nickel oversupply. The Indonesian government approved a nickel ore mining quota of 298.5 million wet tons for 2025, far exceeding market expectations. Meanwhile, previously inflated demand expectations from the electric vehicle industry, coupled weak global stainless steel demand, have led to rising exchange inventories: London Metal Exchange (LME) nickel inventories are at a four-year high, while Shanghai Futures Exchange (SHFE) nickel inventories are also ample.

Analysts note that low nickel prices and environmental compliance issues have already forced several nickel producers to suspend operations. If nickel prices fall further, more capacity cuts could be triggered. In the short term, these factors will suppress any substantial rise in nickel prices, continuing to provide stable cost support for the stainless steel market.

5 Summary
Looking ahead, while the US stainless steel market remains firm due to the 50% tariff floor, it still faces dual tests of trade policy adjustments and capacity expansion. Opportunities and challenges coexist as the market landscape undergoes restructuring. Industry participants need to closely monitor contract season negotiations and policy movements of major trade partners to prepare for potential market volatility.