As Q3 unfolds, carbon steel buyers across North America are once again facing the unpredictable terrain of price fluctuations. Procurement managers at steel service centers must read beyond the daily spot prices and take a broader view—because what’s happening at the mill, port, and scrap yard is impacting every dollar you spend.
Q2 Recap: A Market in Flux
Before looking ahead, it’s worth understanding what Q2 taught us. Carbon steel pricing started the quarter on a rebound, driven by mill outages, tight raw material inventories, and some pent-up demand from automotive and construction sectors. Hot-rolled coil (HRC) briefly touched the $900/ton mark before correcting as service center inventories normalized and import arrivals picked up pace.
Procurement managers who locked in volume in late Q1 saw temporary relief—but that window closed quickly. Since then, lead times have shortened, and domestic mills are adjusting pricing based on real-time demand, creating a volatile environment going into Q3.
Three Key Factors Shaping Q3 Carbon Steel Pricing
Raw Material Inputs Are Tightening Again
Iron ore and coking coal prices—two of the biggest input drivers—are trending upward as Brazil and Australia contend with production constraints and weather events. Domestically, scrap prices remain firm due to strong export pull from Turkey and Asia. If input costs hold or rise further, mills will pass those increases downstream, especially for flat-rolled and structural carbon grades.
Import Pressure Is Increasing—but It’s Uneven
The stronger U.S. dollar and easing freight rates have made foreign steel more attractive. However, geopolitical factors—including Section 232 tariffs, shipping delays through the Red Sea, and port congestion—are muting the full impact. That means import arrivals are helping ease some supply-side pressure but not enough to stabilize pricing fully.
Demand from Core Sectors Is Fragmented
Construction demand has held relatively steady, with infrastructure spending supporting long product demand (rebar, beams). Automotive is lagging slightly due to ongoing supply chain issues, reducing pull on cold-rolled and galvanized coil. Appliance and manufacturing segments are showing moderate recovery, adding uneven pressure across product lines.
What Procurement Managers Should Do This Quarter
1. Lock in Base Tons Before Further Escalation
While prices may have cooled slightly from early Q2 highs, the fundamentals still lean bullish. Consider locking in base volumes for HRC and CRC before mills adjust formulas upward. Contract discussions should include escalation clauses that allow for partial adjustment tied to scrap or raw material indices, not just flat pricing.
2. Reassess Index-Based Buying Strategies
If you’ve been sourcing on a spot index, now is the time to review whether that model still protects margin. With daily volatility increasing, some buyers are shifting to hybrid contracts—base price plus/minus market index within a floor and ceiling band. That buffer helps protect against both overpaying during surges and under-buying in downturns.
3. Reevaluate Customer Surcharges
If your company includes surcharge mechanisms in contracts (for freight, raw materials, or energy), make sure they’re being updated quarterly. Too many service centers are eating costs because surcharge clauses haven’t kept pace with upstream volatility.
4. Expand Supplier Discussions Beyond Price
In this environment, availability and consistency are worth as much as cents per ton. Have open dialogues with mills and master distributors about Q3 order books, maintenance shutdowns, and capacity changes. Early insights here will give you the opportunity to place orders ahead of known bottlenecks—especially for narrow-width coil or custom cut-to-length products.
5. Explore Strategic Buys in Undervalued Categories
Not all carbon steel grades are moving in sync. While HRC and CRC are under upward pressure, merchant bar and wide-flange beams are still seeing subdued pricing in some regions. Take this opportunity to build buffer stock in areas with favorable pricing before demand catches up in late Q3 or early Q4.
6. Watch for Regional Disparities
Certain domestic mills in the Midwest are quoting more aggressively to maintain share, while coastal service centers may face upward pricing pressure due to import congestion and limited warehouse space. Adjust your sourcing regionally to take advantage of these imbalances.
Looking Ahead: Will Q4 Bring Relief?
The outlook for Q4 remains unclear. Much depends on whether construction demand persists past peak season and if mills maintain discipline on production. Inventory levels at service centers are currently manageable, but a demand spike in September or an early winter disruption could quickly flip the balance.
If you manage procurement for a service center, use Q3 to set the tone for the rest of the year. Double down on forecasting discipline, strengthen supplier alignment, and be proactive in customer pricing conversations.
Conclusion
Carbon steel procurement in Q3 2025 demands more than tactical buying. It requires strategy, vigilance, and smart positioning. From understanding the cost structure of your steel to navigating regional pricing disparities and timing your buys around raw material cycles, this quarter will reward those who think two steps ahead. Your margin—and your reliability as a supplier—depends on it.
