Tariffs cause SDI to shift pig iron, scrap mix

Market: Metals
23/04/25

US tariffs on pig iron imports are prompting electric arc furnace steelmaker Steel Dynamics to lean more heavily on prime and shredded scrap in its flat-rolled melt mix.

The White House put 10pc tariffs on most countries this month, including major pig iron-producing nations Brazil and Ukraine. The import tax raised the cost of pig iron and encouraged Indiana-based Steel Dynamics (SDI) to increase scrap usage at its flat-rolled mills, the company said today on its quarterly earnings call.

"We could go anywhere from 8pc to 25pc on a pig iron, and we will make those decisions based on what the market pricings are of those different units," chief executive Mark Millet said.

The outbreak of the war in Ukraine in 2022 shocked the pig iron market and caused prices to skyrocket. SDI, at that time, replaced some pig iron with shredded scrap and busheling. It could use that same playbook while tariffs on pig iron are in place, the company said.

The current tariff scheme will not affect SDI's long product steel mills because they rely strictly on scrap in their melt mixes, nor will the tariffs have an impact on scrap imports from Canada and Mexico.

SDI's scrap costs fell to $386/st in the first quarter, down from $417/st in the same period last year. Its total scrap shipments were steady at just over 2mn gross tons (gt) in the quarter.

The decrease in scrap costs from a year earlier came despite a surge in ferrous scrap prices in January and February. The surge caused SDI's steel-to-ferrous raw material margin to narrow to $612/st in the first quarter, down from $784/st a year earlier.

SDI reported a $217mn profit in the first quarter, down from a $584mn profit in the same period of 2024.

By James Marshall

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