Metals Industry Update Q3 2025

The U.S. metals sector navigated a subdued third quarter, marked by seasonal softness, disciplined purchasing activity, and persistent trade uncertainty. Industrial sentiment remained cautious, with a slight expansion in manufacturing output emerging after July.

Policy developments continue to play a pivotal role in shaping the business landscape. The expansion of Section 232 tariffs to a broader range of steel and aluminum-containing products in August reinforced the push toward domestic sourcing. While this benefited U.S. producers, it also contributed to upward pressure on input costs and added complexity to global supply chains.

On the other hand, the tariff exemption of Brazilian pig iron eased some cost concerns and the late-quarter Fed rate cut signaled incremental monetary support. The “One Big Beautiful Bill,” with its tax incentives and bonus depreciation provisions, is expected to spur capital investment across the metals sector and drive growth.

End-market demand remained soft, with modest signs of improvement in some pockets. Non-residential construction planning gained momentum, led by strength in data center, warehousing, and public infrastructure development. Additionally, the automotive industry showed resilience as electric vehicle (EV) sales advanced in Q3 before the expiration of federal EV tax credits.

Looking ahead, the U.S. metals sector may find support from anticipated improvement in manufacturing activity alongside supportive government measures. However, the breadth of recovery remains tied to the trajectory of the prevailing trade policy and magnitude of Fed interest rate adjustments. Further, the recent government shutdown has introduced waves of uncertainty for metal-reliant federal projects, with its full impact likely to unfold in Q4.

Q3 marked a strong uptick in M&A activity owing to comparatively greater consolidation by service centers. Deal activity is expected to increase further in upcoming quarters, assuming more supportive monetary policy and a stabilized tariff environment.