US steelmakers bullish

Steel Times International | April 2026

Government policies and tariff uncertainty plus supply issues mean one thing: only moderate growth in 2026. Myra Pinkham reports.

While challenged by the uncertainty caused by tariffs and other governmental policies, as well as certain supply issues, the North American automotive industry is expected to see at least moderate growth this year. That, as well as the anticipation of continued reshoring of auto manufacturing, should be supportive of US steel suppliers to that market.

“Steel is essential and is the material of choice in the design and manufacturing of most North American light vehicles today,” said Brian Esterberg, the American Iron and Steel Institute’s (AISI’s) senior automotive market strategist, pointing out that it continues to comprise more than 50% of the average light vehicle’s mass and that fluctuations in the vehicle mix might not necessarily have a large impact upon automakers’ use of steel sheet for vehicle body or architectures.

Ron Ashburn, executive director of the Association for Iron & Steel Technology (AIST), noted that with the automotive industry accounting for about 14% of US steel demand, year-to-year changes in auto demand are important to domestic steel producers.

However, he said that given the long-lived nature of steel assets he believes that steelmakers largely remain bullish about long-term North American automotive steel demand.

According to GlobalData Ltd, North American light vehicle production fell to 15.1 million vehicles last year, down from nearly 15.5 million vehicles in 2024.

Abey Abraham, managing principal of Ducker Carlisle’s automotive and materials practice, noted that there were several different things that drove that decline.

He said that while a big factor was the uncertainty caused by the implementation of certain tariffs and other domestic trade policies, there are others as well. That includes certain rebates and credits that have been taken away from the Inflation Reduction Act (IRA) by the One Big Beautiful Bill Act (OBBBA), most notably electric vehicle purchase incentives.

However, David Leah, CRU’s senior automotive analyst, said that the year-over-year decline was not as steep as was initially anticipated, partly because the auto and auto parts tariffs that the Trump administration announced last April were less disruptive to the auto market than had been expected.

He said there were several reasons for that including a reduction of tariff rates and that some automakers have absorbed some of the cost. He added that moves to manage vehicle inventories have also helped, as has the fact that tariffs have lowered imports into the US and could result in more onshoring or reshoring of domestic auto manufacturing.

That said, while he agrees that further onshoring and reshoring of auto production is possible, Philip Gibbs, a senior equity research analyst for KeyBanc Capital Markets, said that he believes that it will take time given the number of challenges in doing so, including that with investment cost and uncertainty about certain trade policies – especially in light of the recent Supreme Court ruling on the International Emergency Economic Powers Act-related reciprocal tariffs, even though they are largely outside of the automotive space.

“The volatility of the tariffs rules has been somewhat paralyzing,” Gibbs said. “Given the cost of doing so, automakers and their suppliers don’t want to invest in new facilities unless they have to.”

However, there are certain factors that limited last year’s auto output decline. Peter Nagle, associate director of Americas light vehicle sales forecasting for S&P Global Mobility, noted that there was some pull ahead of North American auto sales, first last Spring with consumers expecting that prices would rise once the auto and auto parts tariffs were put into place, and then again with consumers looking to buy electric vehicles before the US EV tax credits expired at the end of September.

CRU’s Leah pointed out that last year’s production decline has been ‘disproportionate for electric vehicles,’ attributing certain governmental policies introduced last year, including the removal of fines upon automakers that don’t meet certain fuel economy and emissions requirements and the potential that the Trump administration could scale back some of those standards.

At this time, it remains somewhat uncertain as to how the US auto market will fare this year, with some market observers, including GlobalData, forecasting a slight increase in North American production, while others say that the amount of that increase (and whether there will indeed be an increase) is not a done deal. “There are still certain headwinds and tailwinds that need to be monitored,” Ducker Carlisle’s Abraham said.

“Automakers want a long-term strategy. They want to have a plan that outlines what needs to be done and to have enough time to implement those plans,” Abraham said, explaining, “When you have a pendulum effect from different goals and policy changes, it makes it difficult for the auto OEMs.”

The tariffs are not the only somewhat uncertain trade issue affecting both the North American auto market and steel suppliers to that market. It is also somewhat uncertain what impact the renegotiation of the United States-Mexico-Canada (USMCA) trade agreement in July will have upon domestic auto and auto parts and steel demand and production, particularly given how many times steel, auto parts and components cross the US, Canada and Mexico borders to produce vehicles.

S&P Global’s Nagle said that despite the tariffs, auto trade between the three countries increased over the past year given their well-entrenched supply chains. He said that he doubts that the renegotiation will severely disrupt things, although there could be some changes – potentially more requirements for US content and value-added services. And once renegotiated it could give both the automakers and their suppliers more clarity.

Mark Schirmer, director of industry insights and corporate communications for Cox Automotive, pointed out that in addition to those related to trade, there have also been changes in policies (largely by executive orders) relating to things like fuel economy and fuel efficiency standards. While, at least for the time being, current regulations remain in place, Trump has eliminated the ability to fine automakers that don’t meet those standards and has also repealed the 2009 ‘endangerment finding’ that stated climate change poses a threat to the public.

Schirmer also noted that this year’s North American auto output could depend upon how US sales and, therefore, dealer inventories trend. He noted that while up month-on-month in February, that was partly because the weather issues impacted January sales and that they remained slightly below the levels from a year earlier.

He said that while domestic dealer inventories are currently at a relatively healthy level, the question is whether sales will slow further on the back of tariff-related cost increases, and what the automakers will do in response – if they pullback their production levels and/or provide more sales incentives.

Even though many of the challenges that the North American auto market experienced last year still remain, GlobalData’s Rinna said that this year there should be a little more clarity about the industry’s path forward and, therefore, North American light vehicle production should increase 1.4% to 15.3 million light vehicles in 2026 and continue increasing over the next few years, reaching about 15.9 million vehicles by 2028.

CRU’s Leah said this is likely to be the case even though certain supply disruptions that occurred late last year, including fires at Novelis’ Oswego, NY, aluminium plant, could continue to have an impact through the first half of 2026, especially for vehicles, such as the Ford F-series pick-up trucks and other vehicles that have more aluminium content.

GlobalData’s Rinna observed that, in a move that could actually be beneficial to steel suppliers to the automotive industry, some automakers have been able to get around that by replacing some aluminium parts with steel parts.

While it takes several years for companies to redesign their vehicles and make sweeping changes, Rinna said that some smaller components can be switched quickly. He added that given the desire of automakers to pull any lever they can to increase vehicle affordability, there could be even more movement in the use of more steel, particularly advanced high strength steels (AHSS), in their vehicles by the 2028-30 timeframe.

Ducker Carlisle’s Abraham pointed out that by weight, iron and steel continues to account for about 54% of the material content in North American light vehicles, down marginally from 55% in 2022, at the same time as light trucks continue to make gains when compared with passenger cars which have roughly a 75% share, given US consumer preference for those vehicles.

He noted that this comes as AHSS steels, which are lighter in weight, have been making gains, with their market share moving up to about 14% of all light vehicle material content from about 12% in 2022 – largely replacing the heavier mild steels.

This, however, varies by type of vehicle, CRU’s Leah said, pointing out that steel accounts for 58% of the materials used in an internal combustion engine (ICE) vehicle versus 47% for battery electric vehicles (BEVs).

AISI’s Esterberg observed that the latest data from the Centre for Automotive Research indicates that, at least in 2025, it was hybrid vehicles that drove the market, with US hybrid sales rising 27.6% year-on-year, reaching a 12.7% market share. Meanwhile, even with the end of EV incentives in the IRA, US BEV sales were up 12.7% year-over-year in 2025, and sales of ICE vehicles largely flat year-over-year.

That said, Cox Automotive’s Schirmer commented that beginning in the fourth quarter of 2025 and continuing early this year, there was a significant decline in EV sales from what he termed as all-time record levels in the third quarter of last year. However, he said that thanks to some new EV and hybrid models being launched, he doesn’t believe that for the full year of 2026 EV sales will decline significantly even as ICE and hybrid sales pick up.

On the other hand, Abraham pointed out that given current market dynamics, several new EVs that were to be launched in 2025-27 are being delayed or put on hold indefinitely while certain ICE models are being extended. “We are also seeing more vehicles with V-8 engines being offered,” he said.

AISI’s Esterberg, however, maintained that fluctuations in the vehicle mix may not necessarily have a large impact on the automakers’ use of sheet steel for vehicle bodies or architectures, explaining, “We have seen automakers continue to adjust their portfolio strategies, including a shift to more AHSS to deliver improved safety and manufacturability – as well as to balance cost and material availability issues for all types of vehicles.

But AIST’s Ron Ashburn believes that over the long term steelmakers remain bullish about North American automotive steel demand, saying that this is evident by some recent investments that they are making to position themselves competitively to supply this market, for which there is such a great need for sustainably produced steel, advanced lightweight steel and electrical steels that are melted and poured in North America.

For example, about a third of the output at Nucor’s greenfield 3Mt (short tons) West Virginia steel mill, which is expected to come online by the end of this year, is geared toward automotive applications at the same time as the company and other electric arc furnace steelmakers are making inroads into supplying exposed automotive sheet products.

Steel mills gearing up for auto production

Ashburn noted that ArcelorMittal is building a 150kt/yr electrical steel line at its Calvert, AL, mill and that Hyundai Steel, in co-operation with POSCO, plans to build a 2.7Mt/yr mill with a 2028 targeted start-up date and around 70% of its output geared towards the automotive market.

“There will be even more opportunities for domestic steel companies to capture more auto share,” Leah said, as they make changes to their production capabilities. For example, he said that more steelmakers are looking to produce steel products aimed at exposed automotive applications.

“Domestic steel mills should gain at least a little automotive-related market share in 2026,” KeyBanc’s Gibbs said, although he doesn’t believe that it will be a dramatic uptick given the costs associated with the automakers changing their supplier at a time when their customers are struggling with affordability issues.

Source: https://www.steeltimesint.com