Hot rolled coil steel is trading at $1,181 per short ton on June 29, up 2.3% on the session and 35.9% above year-ago levels. The US futures market has been at multi-year highs, with the benchmark reaching $1,194 in early June, the highest since March 2023. The North American market is running on a different fundamental logic than the rest of the world, and that divergence is the most important feature of the current market.
The United States is the standout bullish story in global HRC. Prices surged 12.7% in Q1 2026 alone, driven by reshoring manufacturing initiatives, accelerating housing starts, and automotive production ramps. Section 232 tariffs and quota measures have effectively curbed uncoated imports from vulnerable origins, allowing domestic mills to command premium realizations. Mills have announced multiple price increases, and buyers have accepted higher offers due to limited spot availability. The North American HRC steel market is valued at $18.65 billion in 2026 and projected to grow at 3.3% CAGR through 2034.
The rest of the world tells a different story. The global steel market faces a structural oversupply crisis. Analysts project modest steel demand growth of just 0.7% per annum through 2027, while global steel capacity is projected to increase by 165 million tonnes over the same period. The result is that global capacity utilization is expected to fall from the current 78-79% toward 70%, putting sustained downward pressure on prices everywhere outside the tariff-protected US market.
China is at the center of the global oversupply dynamic. Chinese HRC export offers are approximately $505/mt FOB Shanghai, less than half the US domestic price. China's surplus steel capacity is being resolved through exports, which requires Chinese prices to stay relatively low to maintain price advantage in overseas markets. The Shanghai Metals Market projects that Chinese HRC prices will shift up narrowly but with limited upside, and mill profits will remain at low marginal levels in H2 2026.
Europe sits between the US and China extremes. Service centers report client demand as practically at a standstill. A Spanish coil seller described the prospect of extremely expensive HRC as a serious concern for downstream processors. European prices have been mostly stable through Q1-Q2 2026, supported more by trade policy measures (tighter quotas, stricter origin checks) and controlled mill supply than by robust consumption. The European Commission is reviewing quota mechanisms to prevent price increases from undermining downstream competitiveness.
The market structure is defined by the wide spread between US domestic prices and global reference prices. At $1,181/st, US HRC is at a $676 premium to Chinese export prices. This spread is sustained by trade barriers but creates a magnet for imports. Any relaxation of Section 232 or quota enforcement would likely trigger an immediate correction in US prices. Mills are aware of this and are managing capacity utilization carefully, scaling output to order books and avoiding the excess spot availability that would invite imports.
Argus Media reports that steel market participants expect a slower, lower-margin second half of 2026 following the supply-led rally in H1. Long steel prices rose very sharply following the outbreak of the Middle East war, with electric arc furnace mills highly exposed to rising energy costs. As energy prices have moderated with the Hormuz ceasefire, that cost support has diminished.
Inventory management across the value chain is conservative. US buyers are following cautious inventory practices, avoiding excessive stock accumulation while ensuring supply continuity. Mills have maintained disciplined capacity utilization rates, preventing excess spot availability and strengthening negotiating leverage. When order books are thin, smaller mills and traders cut prices, but larger integrated mills prioritize higher-value or more profitable coil grades rather than competing aggressively on volume.
Bull case: US infrastructure spending and reshoring maintain demand momentum through 2026-2027. Section 232 remains in place, imports stay restricted, and US mills maintain pricing power above $1,100. Bear case: Global steel demand weakens further, Chinese exports surge into Southeast Asia and the Middle East, and some of that tonnage finds its way to the US despite tariffs. US HRC corrects toward $950. Base case: US HRC trades $1,050-1,250 through H2 2026, with the premium to global prices remaining wide but stable.
US HRC at $1,181/st is near the top of the current cycle. The premium to global prices is historically wide, which carries two implications. First, the downside risk is asymmetric: if trade policy changes or global weakness pulls US prices toward global levels, the correction could be $200-300. Second, the upside is limited because mills are managing capacity to prevent the overproduction that would trigger a downturn. For steel buyers, the current environment favors shorter-duration contracts and a willingness to buy on dips rather than locking in long-term fixed prices. Cover 60% of Q3 requirements at current levels but keep Q4 open. The key risks to monitor are (1) any Section 232 modification signal from the administration, (2) Chinese steel export volumes and pricing, and (3) US mill capacity utilization rates. If utilization stays below 80%, mills have room to increase output without pushing the market into oversupply. The best buying opportunity in H2 2026 likely comes during the seasonal August lull, when European buyers are on holiday and mill order books thin temporarily.