Articles
How shifting demand, supply constraints, and a new tariff regime keep Houston steel buyers guessing
By Bart Taylor, GHMA
Managing commodity prices has become a full-time job for US manufacturers, from plastics to carbide as we’ve detailed.
I reached out to Sam Stein at Houston stalwart Triple-S Steel to make sense of the current and future state of steel pricing, manufacturing’s nameplate commodity.
Like many South Texas industrial stories, the arc of Triple-S spans generations. “My great grandfather had a scrapyard and my grandfather started the steel company by going through his father's scrapyard and finding the steel that was good enough to resell,” Stein recounts. “My father took over in the eighties and he's been the CEO ever since. We've grown from a little retail steel company to one of the largest wide-flange beam distributors in the country, with approximately 60 locations, including South America.” Stein “wears many hats” in the business and identifies today as the Product Manager for plate products for the company’s Texas divisions.
Today, steel prices are high. Shifting demand, supply constraints, and tariffs are making for a volatile mix. ForecastEconomics reported that “In April, prices extended their gains for a seventh straight month. U.S. mills are pushing through price increases driven by higher input costs caused by the U.S.-Iran conflict. Higher prices for iron ore, a key steelmaking feedstock, also lent support.”
FE might have added that U.S. mills are also being opportunistic, a fact Stein acknowledges. “That's the world we live in. If you're not taking advantage of an upswing in the market or supply side tightness to raise your prices, you're not doing your job.”
I asked Stein to assess the impact of tariffs. “In 2018, when the (Section) 232 tariffs first appeared, steel was unfairly traded,” Stein said. “Some countries, some products, were worse than others. The short-term impact was a spike in prices. But within a year, prices had leveled off and imports had come back into the market because the U.S. price had gotten so high that foreign producers could effectively eat the tariff and still be competitive.
“Then 2020 happened (COVID) and supply chains all over the world collapsed, and the low pricing environment of 2020 kept a lot of foreign steel out of the US. There was no economic activity, but steel is an essential industry, so the steel mills never shut down, the service centers like us never shut down, the fabricators never shut down,” Stein recounts. “The steel mills had short lead times because their order books weren't full. And steel was cheap enough that we were able to buy whatever we wanted at a good enough price domestically.”
As demand rebounded, so did the price of steel. “Demand exploded in early ‘21 – and steel prices climbed dramatically all through ‘21 and stayed elevated through most of ‘22. And we bought a lot of foreign steel. We bought a lot of domestic steel in those years as well, but we bought a lot of foreign because we couldn't buy everything we needed; mills could not fill every order they took,” Stein said.
“Things leveled off a bit in ‘22, and then prices again came back down to earth, coinciding with the cool-off in the construction of distribution centers. I can't say that's the only thing that drove steel prices down, but it was an inflection point. When Amazon canceled multiple distribution centers in one day, it was a big signal to a lot of us that in non-residential construction markets, things were cooling off,” he said.
Cue the next cycle. “Things started to pick up again in ‘24 then after the election in ‘25, things started to heat up even more,” he said. Supply constraints also began weighing on prices. “Between mill outages and some bigger end-user jobs – line pipe, for example, which can be thousands of tons – that's been eating capacity this year. And then there’s the data center work. Selling steel for data centers last year was certainly a lot of fun,” he laughs.
Have tariffs crashed the party for Stein and his customers? “They’re the world we live in today, and whether you’re a manufacturer or fabricator who has to adjust estimates or internal budgets to deal with higher cost materials, or you're a service center like me who suddenly has fewer vendors available, it's all part what we deal with every day,” he said. “And tariffs aren’t the only reason prices are elevated right now.”
Stein says his customers have also adjusted as the tariff model has evolved. In prior rules, tariffs applied only to the value of unfabricated steel within the finished good. Today, tariffs now apply to the total value of the steel-containing good.
“Let's say you're a manufacturer in Mexico. You've got a $100 worth of steel in some widget, and you fabricate-up that widget. The value of what you paid for the steel is $100, but given the value of labor and marketing and all that, you sell this item for $500. Originally, you only paid a tariff on the $100 worth of steel. Now, within the last month, that's changed, so that now the tariff applies to the total value of the steel containing good,” Stein explains.
And depending on the country of origin, tariffs differ. “If you're a manufacturer in Mexico and buy $100 worth of steel from a US producer and re-export it back to the US, it's 10 percent if it's American steel,” Stein said. “Let's say you bought $100 worth of steel from Korea, that $500 widget gets tariffed at 50 percent.”
Which adds a considerable burden to offshore producers.
But the challenge for thousands of US companies is that we’ve come to rely on offshore producers for the imported widgets sold in whole or as components for OEMs. It’s not always an Us-vs.-Them scenario. It’s often Us-vs.-Us.
Looking Forward: Growth Industries
I ask Stein to forecast the next 12 to 18 months in Houston manufacturing. “I don’t think data centers are going anywhere in the next 12 months,” he replied.
“Oil and gas is a total crapshoot based on what happens in Iran and the Strait of Hormuz. Right now, we've seen a lot of oil and gas projects get put on hold because no one knows what the price of oil will be tomorrow. A lot of projects get put on hold when there's just that much uncertainty.
“Marine construction, particularly barge and boat building, is having a strong year so far. And for the most part, I see that continuing at least through the end of the calendar year,” Stein said. I mention the Davie maritime investment in the Gulf. “Yes, that's one we're paying close attention to.”
Stein also has eyes on the significant electronic ecosystem in Greater Houston. Foxconn’s major facility expansion has been an eye-opener, for one. I also mention SpaceX and the growing aerospace opportunity. “That’s an area we see as a real growth sector. Not just SpaceX, but everyone who wants to be a part of that industry, everybody who wants to sell something to SpaceX.
“I think the new space race is going to be a big part of the story of the steel industry,” he said.
As for a forecast on steel prices? “Over the next 12 months, I think they will probably continue to rise, but not quite as aggressively as they have at the start of the year. My gut says we're pretty close to the peak. But you know, I've been wrong before,” he laughs.
And perhaps slightly confused. I asked Stein to help me understand why, in light of healthy demand and high prices, tariffs were needed to protect the domestic steel industry, not to mention the push from 25 to 50 percent for offshore providers. “I admit I didn’t see that one coming,” he said, and added, “the application or removal of tariffs isn’t perfectly correlated with what’s actually happening in the market. Tariffs seem to be more about protecting the industry existentially.”
A worthy goal, even if today it may be a solution in search of a problem.
Bart Taylor is president of the Greater Houston Manufacturers Association. Reach him at [email protected].
Triple-S Steel is a GHMA member company. Reach Sam at [email protected].
