Steel mill shutdowns and import price increases may hit the US dollar

XM Forex APP News - Thursday (August 14) According to the Chicago Mercantile Exchange's FedWatch tool, the market expects the possibility of the Federal Reserve cutting interest rates in September as moderate inflation data in July shows that the transmission effect of US President Donald Trump's extensive import tariff policy on the inflation of the residents' sector has not yet been clearly seen. On the evening of August 12, the US Consumer Price Index (CPI) data for July was released. Data shows that the U.S. CPI grew by 2.7% year-on-year in July, with an expected 2.8% ehadb.cnpared with 2.7% in June. The US CPI grew by 0.2% month-on-month in July, and was expected to be 0.2%, ehadb.cnpared with 0.3% in June. Trump posted on the social platform "Real Social" that tariffs did not push up inflation, nor did they cause damage to the economy, and criticized Goldman Sachs for its inaccurate judgment on the impact of tariffs. "The CPI data in a single month is not enough to confirm the inflation trend," said Carol Kong, a foreign exchange strategist at the Federal Bank (CBA). Based on the current market trends of the US steel, corn and other industries, the US economy may have the possibility that "the price of some industries will fall due to insufficient demand, the price of the downstream will rise due to rising import costs, and the overall CPI will remain stable but structural inflation will be serious." The adverse impact of the U.S. fundamentals, along with the expected U.S. rate cut cycle, will be expected to start, and the price of suppressing tariff changes is that the increased costs are borne by steel distributors, processors, OEMs and end users, but market participants say manufacturers are also affected by the decline in short-term demand. In this environment, steel mills with insufficient equipment are being idle. This is not surprising to market participants. Tariff policy keeps material dealers walking on thin ice US President Donald TrumpDuring his second term, he is trying to re-align the global economic order. But in the process, his government "moved too fast and destroyed too much," said a steel processor. As a processor, he hoped to have flexible choices in raw material procurement, supply chain layout, etc. to deal with market changes and reduce risks, but Trump imposed a 25% tariff on steel in March and doubled the tariff to 50% in accordance with Article 232 on June 1. This leads to extremely unstable basic conditions such as market environment and trade rules, just like "the ground under your feet changes every day." President Trump is vigorously promoting the reconstruction of domestic manufacturing and heavy industries. However, the analyst pointed out that steel producers are only part of the supply chain and gave examples of the domestic sheet industry. The industry relies heavily on imported steel substrates to meet its needs, most of which ehadb.cnes from Brazil. Structural supply is insufficient, manufacturers are facing a surge in import costs. The processor said, "The Trump administration has a clear priority, namely, building the defense and energy sector, a priority for the shipbuilding administration - but all shipyards need finished steel plates, and the United States currently has insufficient capacity for finished steel plates." The processor emphasized that the United States has a problem of "insufficient supply of structural thin plates." "The supply of thin plates is less than about 5 million tons; the reality is that thin plates must be bought from outside." Brazil exported 942,793 tons of steel plate in June, of which the United States received 752,503 tons. Despite the recent 50% tariff on steel and aluminum imports, the United States remains the leading buyer of Brazil. On August 1, the price of No. 1 billet exported by Brazil was US$465-480 per ton, up 0.53% from last week's US$465-475 per ton. From the Cleveland Cliff Factory closure to market dynamics The processor said it was no longer possible to buy raw materials from overseas due to a 50% tariff on steel imports. And domestic demand is also slowing down abnormally. "This is a demand story," said a steel distributor. They stressed that it would be more difficult for domestic upstream steel producers if it weren't for tariffs. We also have to face the impact of raw materials, but the weak domestic steel demand caused by tariffs is a more fundamental problem. Distributors said they were not surprised that Cleveland-Cliffs closed three factories because "it was a downturn." Cleveland-Cliffs closed its Iron City and Concohenton plants indefinitely on June 30, as well as its River Delay, Illinois. Concorken Facilities and U.S. Steel Demand Challenge The Cleveland-based steel manufacturer said it could list its Concord-based blackboard coating facility for sale two weeks after reopening if conditions permit. Cleveland-Cliffs acquired the Conshawhoken plant from Arcelomital in 2020. The facility processes rolled and discrete sheets, including military and ehadb.cnmercial alloys, as well as heat-treated carbon products. As a sheet processor, the closure of the Conshaw Hocken factory "will not affect the supply of sheets in the US market. We are only manufacturers of processing sheets," the processing plant said. The processorSpot board demand remains sluggish, said. Some domestic sheet processors are actively negotiating with customers to offer transactions at lower than the listed quotes. Falling steel plate prices and weak steel demands in the U.S. steel plate prices fell for the second consecutive week, and spot trading was reportedly slow. On August 5, it was $53 per 100 pounds ($1,060 per ton), down 1.85% from $54 per 100 pounds on July 29. The Iron City Factory produces railway rails and flat steel. It is one of the three largest steel mills in the United States, the other two are Evraz in Pueblo, Colorado and Steel Power in Columbia City, Indiana. The steel processor said the Stelton Steel Plant equipment was outdated and inefficient. "There are only a few railways in the city of Steel, and the equipment is really old and inefficient; I don't feel surprised that it is also idle," said Hedale facility, shutting down steel supply, on the other hand, a ehadb.cnpact strip mill that produces hot-rolled sheets, including high-carbon and alloy black belts. Steel dealers say the steel produced at the Hedale plant is "specialized, high-carbon products that other manufacturers are reluctant to produce." "In a downturn in economic environment, low-yield, difficult to manufacture, high-cost products, I understand why they closed the Hedale plant," the distributor said, adding, "Despite the tax, customers of the Hedale plant had to purchase this steel from overseas." Another steel distributor told reporters, "From the last earnings call of Cleveland-Cliffs, it's clear they need funds, so they are looking to divest the assets." Lorenzo Gonsalves, CEO of Cleveland Cliffs, said some idle assets could be sold on the ehadb.cnpany's second-quarter earnings call on July 21. Cleveland Cliffs lost $470 million in the second quarter of 2025. During the earnings call, Gonsalves hinted that the integrated ehadb.cnpany itself is a valuable and sellable asset. The current tariff policies and market supply and demand pattern in the United States may lay the groundwork for the phenomenon of "downward prices, rising downstream prices, stable overall CPI but serious structural inflation." This trend has been shown in the steel and corn industries. If tariff policies continue and the supply and demand contradictions have not eased, this structural inflation may further spread and become a prominent issue in the operation of the US economy. Suppress together with the downward trend of interest rates

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