The March edition of Signal Ocean Research offers an in-depth analysis of the U.S. steel industry. It examines how recent developments—such as tariffs and trade tensions—could reshape global commodity markets and the dry bulk freight sector. Leveraging data from the Signal Ocean Platform, we explore current steel trade flows and assess the potential for structural shifts in the existing market framework.
Global Steel Trade Dynamics (2023–2024)
According to data from the Signal Ocean Platform, global seaborne steel flows totaled an estimated 407.6 million tonnes across 2023 and 2024, highlighting the resilience and redistribution of trade amid shifting geopolitical and economic conditions. China remained the dominant origin country, accounting for 34.2% of total flows, followed by Japan (14.4%) and South Korea (10.6%)—underscoring Asia’s continued centrality in steel supply chains. Key export hubs included Tianjin, Bayuquan, and Kwangyang, with cargoes primarily moved by Supramax vessels (47.8%), and to a lesser extent, Handysize (27.5%). On the demand side, the United States led as the top destination country (10.7%), with Turkey (8.5%), Mexico (5.1%), and India (4.3%) following closely. Notably, Thailand/Vietnam (7.4%) and the US Gulf (7.4%) emerged as key regional destination areas, pointing to strong demand across both developed and emerging markets. With steel billets, slabs, and coils making up the majority of cargo types, the global market appears to be adjusting to new demand centers and trade flows driven by policy shifts, regional production trends, and the strategic positioning of major players like China, India, and Iran. The data reflects a dynamic rebalancing of global steel trade with broad implications for dry bulk freight patterns.
Theoretical Foundations of Protectionism in Steel
The U.S. steel industry, once a global leader in the early 20th century, has seen its dominance challenged by globalization and the rise of low-cost producers abroad. To combat this, protectionist trade policies, particularly tariffs, have been reintroduced as a way to bolster domestic steel production. Economic theory suggests that tariffs can help correct trade imbalances, protect strategic industries, and preserve domestic jobs by raising the cost of imported goods. By imposing a 25% tariff on imported steel, the intention is to shield U.S. producers from cheaper foreign competition, enabling them to increase prices, improve profit margins, and invest in domestic production capacity.
However, the real-world impact of these policies is more complex. The U.S. manufacturing sector is heavily reliant on steel as a key input, and raising its cost creates ripple effects throughout industries such as automotive, construction, and energy. While tariffs help steel producers, they simultaneously increase production costs for these downstream industries, which ultimately results in higher prices for consumers and businesses. The steel industry’s historical significance to the U.S. economy—driving industrial development, infrastructure projects, and the automotive sector’s global leadership—has been eroded as globalization has brought about competition from lower-cost steel producers. This shift has caused significant revenue losses, production declines, and plant closures within the U.S. steel industry.
The political landscape surrounding the steel industry has become increasingly contentious, particularly during the Trump administration, which imposed tariffs to protect the sector. This report will explore the fundamentals of the steel industry, the dynamics of the competitive global market, the likely outcomes of protectionist policies, and the implications for trade flows. It will also examine how these policies may reshape both the domestic steel market and broader sectors that depend on steel.
Setting the Scene
As of April 3, 2025, President Donald Trump has significantly expanded U.S. tariff policies, marking a substantial shift in international trade relations. On April 2, during what he termed “Liberation Day,” President Trump announced a 10% universal tariff on all imports, with higher “reciprocal” tariffs targeting specific countries based on their trade practices. Notable tariffs include 34% on Chinese imports (in addition to existing levies), 32% on Taiwanese goods, 24% on Japanese products, and 20% on those from the European Union. These tariffs are set to take effect on April 5, with the country-specific rates commencing on April 9. In addition to these measures, the previously announced 25% tariff on imported automobiles has come into effect as of April 3, 2025. This tariff is expected to impact automakers relying on international supply chains, potentially leading to increased costs and declines in sales. The administration justifies these tariffs under Section 232 of the Trade Expansion Act of 1962, citing national security concerns.
The international community has responded with apprehension and retaliatory measures. The European Union has vowed to prepare countermeasures, while China and Taiwan have also pledged to retaliate. Stock markets have reacted negatively, with significant declines in European indexes and U.S. stock futures. Economists warn that these tariffs could lead to higher consumer prices and contribute to global economic uncertainty. In response to the U.S. tariffs, the Canadian province of Ontario had previously imposed a 25% surcharge on electricity exports to U.S. states including Michigan, Minnesota, and New York. However, this surcharge was suspended on March 11, following discussions between Ontario Premier Doug Ford and U.S. Commerce Secretary Howard Lutnick.
These developments represent a significant departure from traditional U.S. trade practices and have raised concerns about potential global economic disruptions. The administration asserts that the tariffs aim to secure domestic production, increase tax revenue, and reduce the trade deficit. However, critics argue that they may lead to increased costs for consumers and businesses, as well as strained relations with key trading partners.
These developments mark a significant departure from traditional U.S. trade practices and have sparked global concern over potential economic disruptions. While the administration defends the tariffs as necessary to secure domestic production, increase tax revenue, and reduce the trade deficit, critics warn of rising costs for consumers and businesses, along with deteriorating relationships with key trading partners. The cornerstone of this policy is a 25% tariff on steel imports, justified under Section 232 of the Trade Expansion Act of 1962, which allows trade restrictions on national security grounds. President Trump has outlined three primary objectives for the tariffs:
Securing Domestic Production: U.S. steel and aluminum producers frequently encounter higher production costs compared to their foreign competitors, which hampers their ability to compete at global market prices. The 25% import tariff is designed to raise the cost of foreign steel, giving domestic producers a competitive edge. This allows them to increase prices while remaining below the cost of imported alternatives, improving profitability. While the global benchmark price for aluminum may remain stable due to broader market forces, U.S. aluminum premiums—the extra cost paid for physical delivery—have already reached record highs as of March.
Increasing Tax Revenue: The administration also anticipates that tariffs will generate significant revenue, which President Trump proposes using to reduce national debt and taxes. However, many economists challenge this assumption, arguing that importers—not foreign exporters—ultimately pay the tariffs. This cost is often passed on to consumers, potentially fueling inflation and reducing purchasing power.
Reducing the Trade Deficit: The rationale is that higher import costs will reduce domestic demand for foreign goods, thereby improving the trade balance. However, historical trends suggest that tariffs alone have a limited effect on the trade deficit, as factors such as exchange rates and global supply chains play a much larger role.
The Immediate Market Response
On March 25, 2025, stock markets experienced notable volatility following the announcement of new U.S. steel tariffs, with major indices such as the S&P 500 dropping by 2% amid concerns over their economic impact. By the end of March, the S&P 500 had declined by 4.6% for the first quarter, marking its worst quarterly performance since 2022. Conversely, the bond market remained relatively stable; the 10-year Treasury yield was 4.23% on March 31, 2025, reflecting measured expectations about long-term growth and inflation. In commodity markets, iron ore prices rose by 5.1% in March, while coking coal increased by 3.7%, signaling expectations of higher input costs for steel production. Finished steel prices also climbed, recording a monthly gain of 2.4%, according to World Bank Commodity Price Data – Pink Sheet, March 2025. These movements highlight how tariff policies drove divergent reactions across asset classes, amplifying uncertainty in equities while supporting commodity prices tied to industrial supply chains.
China’s Role: Strategic, Yet Indirectly Affected
While China remains the world’s largest producer and exporter of steel, it accounts for only 3.7% of U.S. steel imports, reinforcing its limited direct exposure to newly announced tariffs. However, the indirect ramifications are more significant. Brazil (32.7%), South Korea (12.9%), Japan (8.9%), Mexico (5.9%), and the European Union (e.g., Belgium 4.4%) together represent a dominant share of U.S. steel import flows, with the United States receiving 10.5% of all observed dry bulk steel cargo. These exporters are likely to redirect their volumes to other markets if U.S. demand weakens due to protectionist measures. With 22.3 million tonnes of steel imports tracked and Supramax vessels handling 62% of the volume, a redirection of even part of these flows could flood regional markets. Unless offset by production cuts, this oversupply threatens to drive global steel prices lower, increasing competitive pressure on all producers, including China, despite its relatively small exposure to the U.S. market. (These insights are based on Signal Ocean platform data for dry bulk flows of steel in the year 2024.)
The Role of Iran in the Steel Trade War
Iran, meanwhile, is positioning itself as a rising player amid shifting steel trade flows. According to the World Steel Association, Iran ranked among the world’s top 10 crude steel producers in 2023, with output exceeding 30 million tonnes. Backed by investments in new production capacity and access to low-cost energy, the country is actively expanding both output and export reach. Traditionally focused on supplying neighboring Middle Eastern and North African markets, Iran is now targeting broader Asian demand, seeking to capture market share vacated by more established exporters facing U.S. trade barriers.
This strategic pivot aligns with Iran’s geographical advantage—it lies within proximity to key importers such as India, Pakistan, and countries in Southeast Asia, allowing competitive delivery via dry bulk shipments. As global oversupply builds from redirected cargoes—illustrated by the 22.3M tonnes of tracked imports in 2024 and potential displacement from traditional exporters like Brazil, Korea, and Japan—Iran may find new openings in underserved regional markets. If global prices decline further, Iranian steelmakers—already operating on tight margins and under sanctions—will likely double down on volume-driven strategies to maintain relevance in an increasingly competitive landscape.
Implications for Dry Bulk Freight Markets
With the recent enforcement of U.S. steel import tariffs, the Supramax segment is entering a period of significant adjustment, particularly as traditional steel flows begin to realign. Exporters such as Brazil, South Korea, and Canada—historically major suppliers to the U.S.—are expected to redirect steel cargoes toward alternative markets, primarily in Asia, the Middle East, and parts of Africa. This shift is poised to increase average voyage distances and elevate ton-mile demand but also risks creating regional mismatches in vessel availability as trade patterns evolve.
Several Supramax routes on the Baltic Exchange are likely to be directly affected. In the Atlantic Basin, routes such as S4A (U.S. Gulf to Skaw–Passero) and S4B (U.S. Gulf to East Mediterranean) may come under pressure. As U.S. import volumes decline, steel shipments on these lanes could diminish, resulting in a buildup of idle tonnage in the U.S. Gulf. This would not only depress freight rates but also complicate repositioning strategies for owners and operators seeking to move vessels into more active markets. According to data from the Signal Ocean Platform, Baltic rates for these routes have shown significant fluctuations over the past year. S4A peaked at over $25,000/day in mid-2024 but dropped to a low of $12,554 by early 2025 before partially recovering to around $16,796 by April 2025. Meanwhile, S4B mirrored this trend, falling from a high of $15,529 to a trough of $5,536, with a modest recovery to $9,086 by April 2025. These patterns reflect the volatility in demand and highlight the potential challenges ahead for Supramax operators in the Atlantic Basin.
Conversely, Asia-bound routes are likely to see strengthening demand. S1B (Canakkale via Black Sea to China) may gain traction as Turkish and Black Sea-origin steel looks eastward. Similarly, routes such as S10 (South China–Indonesia round voyage) and S8 (South China–India round voyage) could tighten, as more vessels are pulled into Asian waters to accommodate redirected volumes. This redirection could create localized vessel shortages in East and Southeast Asia, raising regional freight rates and increasing congestion risk at major discharge ports.
At the same time, new intra-regional trades are likely to emerge. Countries like Iran, the UAE, and Saudi Arabia are expected to ramp up exports of semi-finished and finished steel products into East Africa, South Asia, and Southeast Asia. This will likely boost Supramax activity across the Red Sea, Persian Gulf, and Indian Ocean, shifting attention toward short-sea routes outside the traditional long-haul structure. As a result, regions such as East Africa and the Indian subcontinent may become increasingly active in Baltic-reported lanes like S5 (West Africa to Continent) and S9 (West Coast India to China), reinforcing their importance as regional pivots for steel trade.
Altogether, the unfolding situation suggests a bifurcated market. While the Atlantic Basin faces the risk of vessel oversupply and weakening spot rates due to declining U.S. import demand, the Pacific and Indian Ocean regions may experience tightening availability and growing rate premiums. For Supramax owners and operators, the tariff-induced realignment signals a need for agile repositioning strategies and close monitoring of emerging steel flows, as the resulting imbalances are likely to create freight rate volatility across the major Baltic routes.
From Steel to Scrap: How Shifting Trade Patterns Are Redrawing the Raw Materials Map
The realignment in the steel trade is also cascading into upstream raw material markets, particularly iron ore, coking coal, chrome, and steel scrap. Countries with shrinking steel production due to reduced export demand—such as Canada and parts of the European Union—are likely to scale back raw material consumption, tightening seaborne trade volumes for key inputs. In contrast, China and India, already among the lowest-cost producers, are expected to increase imports of raw materials to capitalize on displaced market share, particularly from U.S.-constrained exporters like Brazil, Korea, and Japan.
Iran is also emerging as a dynamic force in this equation. With crude steel production exceeding 30 million tonnes and ambitions to expand exports across Asia and Africa, Iran may intensify its demand for raw materials—especially iron ore and scrap—to sustain higher output. Its geographic proximity to resource-rich and high-demand regions gives it a logistical advantage in sourcing and delivery, especially via dry bulk carriers.
Meanwhile, the United States, though self-sufficient in coking coal and a net exporter of iron ore, remains entirely dependent on imports for chrome, primarily from Finland, South Africa, and Kazakhstan. If the U.S. intends to boost stainless steel production domestically, it will either need to increase chrome imports or shift toward greater use of stainless steel scrap, which contains secondary chrome—offering a path to reduce reliance on primary chrome imports.
This intricate feedback loop between finished steel flows and raw material sourcing is becoming a pivotal driver of bulk commodity pricing. As trade patterns evolve and countries like Iran and India expand production while others pull back, new price pressures could emerge in coking coal, chrome, and scrap markets, shaped by the intensity, location, and direction of steel output realignment.
The Long-Term Outlook: Policy, Innovation, and Freight Volatility
While tariffs have succeeded in temporarily supporting U.S. steel prices and domestic production, their long-term effectiveness is questionable. Sustainable industrial revitalization requires more than trade barriers—it demands innovation, investment in efficiency, and coordination across global supply chains. Without addressing these fundamentals, the industry risks becoming reliant on artificial price supports that distort market behaviour.
In parallel, the dry bulk freight market must adapt to this new order. Freight demand will increasingly be shaped by regionalism, longer average voyage distances, and strategic commodity repositioning. Vessel operators must navigate emerging imbalances in fleet deployment, shifting cargo flows, and evolving backhaul dynamics.
Ultimately, steel prices and dry bulk freight rates will remain highly sensitive to changes in trade policy, geopolitical tensions, and infrastructure-led demand cycles. While protectionist policies may offer near-term support, lasting stability and growth will hinge on deeper systemic shifts in both the steel and shipping sectors.
Source: Signal Ocean
