US hot rolled coil demand is being supported by a resilient non-residential construction market, the largest single end-use sector for flat-rolled steel. Dodge Construction Network data through May shows non-residential construction starts up 7% year-over-year, with total project value reaching $245 billion in the first five months of 2026.
Manufacturing projects are the standout segment. Construction starts for manufacturing facilities — including battery plants, semiconductor fabrication facilities, and renewable energy equipment factories — were up 15% year-over-year. The CHIPS Act and Inflation Reduction Act incentives continue to drive investment. These are large-scale projects with multi-year construction timelines, providing persistent steel demand visibility.
Data center construction is the fastest-growing segment. Data center starts rose 22% year-over-year, driven by hyperscaler investments in AI compute infrastructure. A single large-scale data center can consume 5,000-10,000 tons of steel, primarily in structural steel, rebar, and electrical enclosures. The market is concentrated in Northern Virginia, Ohio, Texas, and Arizona.
The automotive sector, the second-largest HRC end-user, is showing modest growth. US light vehicle production reached 5.3 million units in H1 2026, up 1.2% from H1 2025. The growth is driven by pickup truck and SUV production, which uses approximately 30% more steel per vehicle than passenger cars. EV production, while growing, uses different steel specifications — a shift from conventional steel grades to advanced high-strength steel (AHSS) — but total tonnage per vehicle remains comparable.
The energy sector is a smaller but growing consumer. Steel demand from oil and gas infrastructure — including pipelines, rig construction, and LNG facility fabrication — is up 4% year-over-year. The oil patch uses approximately 3 million tons annually of steel products, with HRC being a significant component for casing, tubing, and structural applications.
Residential construction remains the weak spot. Housing starts are flat year-over-year at 1.35 million annualized units, with high mortgage rates (7.1% average 30-year fixed) constraining demand. Residential construction accounts for roughly 12% of HRC consumption, so the weakness is noticeable but not decisive for overall market balances.
The demand story is bifurcated. Non-residential is strong, residential is weak. For HRC buyers, this means the floor is higher than it would be if both sectors were down, but the ceiling is limited by the fact that the construction pipeline can only absorb so much. The data center and manufacturing capex cycle should provide demand support through 2027. Plan procurement volumes accordingly.