Major U.S. steelmakers, including Nucor (NYSE:NUE), Steel Dynamics (NASDAQ:STLD) and U.S. Steel, to announce a decline in second-quarter earnings. Analysts note that the steel industry may continue to face challenges due to further decline in steel prices as the steel season approaches, which is typically a slower period for steel consumption.

These companies have already indicated lower profits from their steelmaking operations in June, citing lower realized prices. Oversupply, driven by both domestic production and imports, has pushed down steel prices, with distributors holding off on buying beyond their immediate inventory needs.

Stuart Gray, steel market analyst at MEPS International, noted that although ample supply has driven down prices, there has been no corresponding rise in steel purchasing. This is attributed to low levels of demand in the market.

Expectations indicate that the downward trend in prices may continue in the summer. Analysts expect buying activity to potentially return later if prices reach a low enough point to prompt distributors to restock. In addition, steelmakers may reduce supply until demand, which has been affected by inflation, rebounds.

Patrick Benfield, professor of supply chain practice at Syracuse University, said that in the short term, U.S. steel producers may close some plants until demand and prices recover.