The United States reported a 45.9% year-on-year reduction in imports of rolled steel during early 2026, reflecting the impact of newly implemented trade measures and heightened tariffs under Section 122. This sharp decline in foreign supply has significantly tightened the domestic market, allowing major US mills to increase spot market prices for hot-rolled coil to over $1,015 per tonne. Analysts suggest that the new tariff regime, which applies a 10% across-the-board duty on nearly all imports, is forcing a localized supply chain shift for North American manufacturers.

According to sources familiar with the matter, the US and Mexico are expected to reach an agreement that would eliminate the 50% tariff imposed by former US President Trump on certain steel imports, reviving a similar deal from Trump's first term. Trump was not directly involved in the negotiations, but any agreement would require his approval. The talks were led by Commerce Secretary Howard Lutnick, the sources said. The agreement has not yet been finalised, the sources added. Under the current terms, US buyers would enjoy duty-free treatment as long as they keep Mexico's total steel imports within a quota based on historical trade levels. The new cap would be higher than the limit allowed under the similar agreement during Trump's first term, though these so-called "quotas" were never fixed numbers but rather designed to "prevent surges," according to the sources. US Commerce Department data shows that last year, the US imported approximately 3.2 million mt of steel from Mexico, accounting for 12% of total US steel imports. During Trump's first term, the US and Mexico reached a deal in 2019 agreeing to prevent imports from exceeding the average level from 2015 to 2017. As of press time, neither the White House nor the office of Mexican President Claudia Sheinbaum had responded to requests for comment. At an event on Tuesday, Mexican Minister of Economy Marcelo Ebrard said he told US officials during a meeting last week that imposing steel tariffs on Mexico was unjustified, as the US exports more steel to Mexico than it imports. Last Friday, he also posted a photo showing him shaking hands with a smiling Lutnick in Washington. "We are waiting for their response because last Friday we provided them with details of our arguments, and we are right," Ebrard told reporters on Tuesday. "So we will wait for their response, most likely this week." The negotiations come as Sheinbaum seeks to reach an understanding with Trump on border migration and drug smuggling, issues for which Trump has demanded Mexico take action. Meanwhile, Sheinbaum confirmed on June 9 local time that she would attend the upcoming G7 summit in Canada. She also mentioned the possibility of a bilateral meeting with US President Trump during the event. Sheinbaum added that migration would be one of the topics discussed during the meeting. Currently, the Mexican Foreign Minister is coordinating the arrangements for various meetings, and has pointed out that in addition to a possible meeting with President Trump, President Sheinbaum will also hold bilateral talks with Canadian Prime Minister Carney.

US President Donald Trump stated in a new executive order on Tuesday that he would raise the tariff rates on steel and aluminum products from 25% to 50% to support the US steel industry. However, this policy, which is essentially arbitrary, has sparked significant discontent in both North America and Europe. According to data, most of the steel imported by the US comes from its two neighboring countries, Canada and Mexico, which are also the two countries that have been the most vocal in criticizing Trump's new policy. In a media statement, the office of Canadian Prime Minister Justin Trudeau stated that the Trump administration's move to raise steel tariff rates is both illegal and unreasonable. The Canadian government is engaging in intensive negotiations with the US to eliminate the tariffs. Mexican Minister of Economy Marcelo Ebrard publicly criticized at an event that Trump's tariffs are unfair and unsustainable, and that Mexico imports more steel from the US. He is committed to seeking tariff exemptions for Mexico. Officials from the European Commission revealed that the Commission is in the final stages of consultations on expanding countermeasures. If no agreement can be reached with the US, existing and additional retaliatory measures by the EU will automatically take effect on July 14 or earlier. Huge Losses Data shows that over 90% of Canada's steel and aluminum exports go to the US. In a statement, the Canadian aluminum industry warned that the additional tariffs have made Canadian exports to the US economically unviable. The Canadian steel industry, on the other hand, stated that the country will face catastrophic unemployment, production slowdowns, and supply chain disruptions. The German Steel Producers' Association, WV Stahl, also warned that Trump's announcement of imposing tariffs on US steel imports marks an escalation of transatlantic trade conflicts to a new level. Kerstin-Maria Rippel, the director of the association, pointed out that the European Commission must find a balance between strict trade protection and reasonable negotiations. The European steel industry needs an effective trade protection tool in the near term; secondly, it is also crucial to continue negotiations with the US on a bilateral steel agreement. European Commission spokesperson Maroš Šefčovič told the media that the European Commission has consistently made it clear that it is willing to take action to defend the EU's interests. The EU's top priority is to create space for negotiations, with lowering tariffs as its long-term goal. Currently, the EU is facing 25% import tariffs on US steel and automobiles, as well as 20% reciprocal tariffs covering most EU goods, and a 10% across-the-board tariff. In response, the EU has imposed countermeasures on US goods worth 21 billion euros and is planning to impose additional tariffs on goods worth 95 billion euros.

★Macro★ 01 ★★★ [China Real Estate News: From the current situation of the real estate market, the timing for a comprehensive rollout of ready-to-move-in home sales is not yet ripe] An article in China Real Estate News pointed out that recently, the topic of ready-to-move-in home sales has once again become a focal point of attention in the industry and media. Firstly, it stems from a "small article" in a foreign media outlet claiming that "China is considering a nationwide rollout of ready-to-move-in home sales." Secondly, it stems from the statement made by the National Financial Regulatory Administration on May 7 that "a series of financing systems compatible with the new model of real estate development will be accelerated in the near future." Thirdly, a document was issued in Xinyang, Henan Province, requiring that "all commercial housing developments on newly transferred land must be sold as ready-to-move-in homes." As an important part of the new model of real estate development, the pilot work for ready-to-move-in home sales has long been underway. According to agency statistics, at least 30 provinces and cities across the country have issued relevant documents to promote the pilot work of ready-to-move-in home sales, and 18 cities have introduced substantive support measures. From a market perspective, the proportion of ready-to-move-in home sales in commercial residential sales has risen from 12.7% in 2020 to 30.8% in 2024, an increase of 18.1 percentage points over five years, indicating a remarkable pace of advancement. However, from the current situation of the real estate market, the timing for a comprehensive rollout of ready-to-move-in home sales is not yet ripe. 02 ★★ EU Initiates Consultations on Carbon Labels for Steel Products Recently, as part of an impact assessment of different policy options related to the Clean Industry Agreement, the European Commission has launched a public consultation, which includes voluntary labeling to indicate the carbon intensity of steel products. The Industrial Decarbonization Accelerator Act is an important component of the Clean Industry Agreement, aiming to enhance sustainable and resilient industrial production in the EU's energy-intensive industrial sectors by supporting decarbonization investments. Its three main objectives are to accelerate the permitting process for industrial decarbonization; identify and promote priority industrial decarbonization projects and clusters; and the last project will consider introducing sustainability and resilience criteria, as well as minimum EU content requirements, in public procurement (and in some cases, private procurement) in strategic sectors. Its purpose is to create a leading market for low-carbon industrial products. In addition, it will assess the promotion of low-carbon-intensity industrial products, including alternatives to EU labeling. The European Commission stated that this will involve developing a voluntary steel label based on EU Emissions Trading System data and the methodology of the EU Carbon Border Adjustment Mechanism (CBAM). The impact assessment will also consider incentives for adopting clean carbon raw materials, including carbon capture and utilization, sustainable biomass, and recycled waste. The European Commission continued its recent rhetoric of strongly supporting the industrial sector, stating, "If the EU does not take more action, it will maintain the status quo, increase the risk of losing European strategic industries, and become overly dependent on non-EU countries in terms of the EU's green, digital, defense, and economic security goals." ★Industry and Downstream Sectors★ 01 Guangzhou Mortgage Interest Rates Increase by 10BP Today Several banks in Guangzhou have raised the additional points for mortgage interest rates. Reporters learned from some banks and real estate agencies that, starting from May 17, the first-home mortgage interest rate for banks in the Guangzhou area has been adjusted from the original LPR-60bp to LPR-50bp. This means that the first-home mortgage interest rate for loans with a term of over five years has increased by 10BP, from the original 3.0% to 3.1%. ★Other Hot Topics★ ⭕ [China Reduces US Treasury Holdings by $18.9 Billion in March, Dropping to Third Place; UK Rises to Second] Data released by the US Treasury Department on May 16 local time showed that among the top three overseas holders of US Treasuries in March 2025, Japan and the UK increased their holdings, while China reduced its holdings. China moved from being the second-largest holder of US debt to the third, while the UK became the second-largest holder. March marked the eve of the current round of market turbulence in US Treasuries. According to the US Treasury Department's March 2025 Treasury International Capital (TIC) report, Japan increased its holdings of US Treasuries by $4.9 billion in March, reaching a total of $1,130.8 billion, remaining the largest holder. China reduced its holdings of US Treasuries by $18.9 billion in March to $765.4 billion, marking its first reduction this year. After the reduction, China's holdings of US Treasuries dropped from second to third place. ⭕[Moody's Downgrades US Credit Rating from AAA to AA1] Moody's, an international credit rating agency, announced on the 16th that it had decided to downgrade the US sovereign credit rating from AAA to AA1 due to an increase in the US government's debt and interest payment ratios. At the same time, it adjusted the outlook for the US sovereign credit rating from "negative" to "stable". Moody's stated that the US federal debt burden is expected to rise to 134% of GDP by 2035, and the US federal government deficit is projected to reach 9% of GDP by 2035. As the economy adjusts in response to tariffs, GDP growth may slow down. ⭕ [CSRC: Increasing Tolerance for Regulatory Oversight of Changes in Financial Conditions, Horizontal Competition, and Related-Party Transactions] The China Securities Regulatory Commission (CSRC) issued the Decision on Amending the "Measures for the Administration of Major Asset Restructuring of Publicly Listed Firms". The decision increases tolerance for regulatory oversight of changes in financial conditions, horizontal competition, and related-party transactions. The requirement that publicly listed firms must fully explain and disclose that the current transaction is conducive to "improving financial conditions" and "reducing related-party transactions, avoiding horizontal competition, and enhancing independence" for the listed firm has been adjusted to "not causing significant adverse changes in financial conditions, not leading to new horizontal competition with significant adverse impacts, and not resulting in related-party transactions that severely affect independence or are obviously unfair." ⭕ [Ukrainian Official Says Negotiations Yielded No Results] Reporters learned on the 16th local time that the Turkish Foreign Ministry announced the conclusion of the trilateral talks between Turkey, Russia, and Ukraine. Oleksiy Honcharenko, a member of the Verkhovna Rada of Ukraine, stated that the negotiations in Istanbul yielded no results. According to Ukrainian sources, as a condition for a ceasefire, the Russian delegation demanded the withdrawal of Ukrainian troops from the Donetsk, Luhansk, Kherson, and Zaporizhzhia regions. Russia's other demands were also "unacceptable" and far exceeded the scope of previous discussions. Additionally, some sources claimed that the negotiations were only suspended, not concluded. ⭕ [Tata Steel India to Increase Iron Ore Production by 15 Million mt Annually] Recently, Tata Steel India, a steel company, plans to significantly increase production at its oldest mine, Noamundi, which has been in operation for a full century. Through Tata Steel's OMQ (Ore, Mines, and Quarries) division, $1.18 billion will be allocated for this purpose. The company plans to distribute these funds among three mines in Jharkhand: Noamundi, Joda, and Katamati. Consequently, its total capacity is expected to increase from the current 40 million mt per year to 55 million mt per year. ⭕ [General Administration of Customs: China Imported 37.83 Million mt of Coal and Lignite in April] The latest data from the General Administration of Customs show that in April 2025, China exported 720,000 mt of coal and lignite, up 29.8% YoY; from January to April, cumulative exports reached 2.13 million mt, up 9.8% YoY. In April, China exported 550,000 mt of coke and semi-coke, down 40.8% YoY; from January to April, cumulative exports reached 2.32 million mt, down 30.4% YoY. In April, China imported 37.83 million mt of coal and lignite, down 16.4% YoY; from January to April, cumulative imports reached 152.67 million mt, down 5.3% YoY. ⭕ [US Steel Imports Rose 11.6% MoM in March] According to preliminary census data from the US Department of Commerce, the US monthly steel imports in March this year increased by 11.6% MoM and decreased by 0.6% YoY, totaling 2,271,358 mt. In terms of value, the total US steel imports in March were $2.61 billion, compared to $2.30 billion in February last year and $2.77 billion in March last year. The major source countries for US steel imports in March included Canada (448,626 mt), Brazil (389,380 mt), Mexico (352,899 mt), South Korea (229,327 mt), Taiwan, China (106,049 mt), and Germany (104,371 mt). ⭕[Successful First Lifting of the Housing for the Rolling Mill in the Zhongshou Special Steel ESP Ultra-thin Strip Production Line Project] At 8 a.m. on May 16, at the site of the Zhongshou Special Steel ESP Ultra-thin Strip Production Line Project, the housing for the R3 roughing mill was successfully hoisted into place, marking the official entry of the project into the core equipment installation phase.

SMM Hot Topic: Aftermath of US Tariff Blast: 27% of Steel Imports Evaporated in February! According to preliminary data from the US Census Bureau, the American Iron and Steel Institute (AISI) reported today that the total steel imports in the US in February 2025 amounted to 2.235 million mt, with finished steel products accounting for 1.623 million mt (a decrease of 27.2% and 29.6% respectively compared to January 2025). Year-to-date, total steel imports and finished steel product imports increased by 5.7% and 7.4% respectively compared to the same period in 2024. Over the 12 months from March 2024 to February 2025, total steel imports and finished steel product imports increased by 3.1% and 5.4% respectively compared to the previous 12 months. The estimated market share of finished steel product imports in February was 22%, and for the first two months of 2025, it was estimated at 24%.

In March, the manufacturing PMI stood at 50.5%, up by 0.3 percentage points from the previous month, indicating a continued rebound in the manufacturing sector's prosperity level. By enterprise size, the PMI for large enterprises was 51.2%, down by 1.3 percentage points from the previous month, remaining above the threshold. The PMI for medium and small enterprises were 49.9% and 49.6%, respectively, up by 0.7 and 3.3 percentage points from the previous month, both below the threshold. In terms of sub-indices, among the five sub-indices that constitute the manufacturing PMI, the production index, new orders index, and supplier delivery time index were above the threshold, while the raw material inventory index and employment index were below the threshold.