BusinessJun 29, 2026
Steel Industry Struggles With Rising Power Costs From Data Centers
Industrial Headwinds
Rhea Lobo
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The American steel industry is caught in a costly fight for electricity with the very customers buying its product.
Data centers consuming roughly 1M tons of steel a year are also driving up the power bills of the electric-arc-furnace mills that make it.
Canton, Ohio-based Metallus said its electricity costs are 70% higher since 2024, adding roughly $15M in annual costs. JSW Steel USA CEO Rob Simon called stable electricity pricing a decades-long norm that's now at serious risk.
The pressure is concentrated in the PJM Interconnection grid, which covers 13 states from the Midwest to the mid-Atlantic. The grid is also home to the country's largest concentration of electric-arc-furnace steel mills. By 2027, PJM forecasts demand will outpace supply by 6.6 gigawatts, roughly six or seven nuclear plants worth of generation.
Data-center construction spending hit $50.7B in April, up 28% from a year earlier. The Energy Department's Lawrence Berkeley National Laboratory projects data centers could consume up to 15.3% of all US electricity by 2030.
Power suppliers are expected to offer electricity at record-high prices in a supplemental PJM auction planned for September, with those costs hitting large industrial users within a few years.
"In the steel industry, our margins are so thin we can't pass along two-times or three-times higher manufacturing costs," said Brandon Farris, Steel Manufacturers Association.
The Steel Manufacturers Association is pushing Congress and the Trump administration for emergency relief, including delaying retirements of older power plants and cutting permitting timelines. New-plant permitting currently averages 4.5 years, the group says.
While the power crunch squeezes existing mills, foreign capital is reshaping the industry's longer-term structure. A year after Japan's Nippon Steel acquired US Steel, the deal has largely delivered on its initial promises.
Workers received $5K bonuses at closing, union contracts remain intact, and the Pittsburgh headquarters hasn't moved.
Korean steelmaker Posco is separately in talks to partner with Cleveland-Cliffs, and Hyundai is building a nearly $6B lower-carbon steel plant in Louisiana. A Japan-based steel analyst described the situation as an unprecedented proxy battle among Asia's three largest steelmakers for dominance in the US market.
Clean-technology investment is also inching forward. Finnish firm Coolbrook recently secured 2.5M euros in grant funding from Business Finland to develop electric heating technology capable of reaching 1.7K degrees Celsius with zero operational CO2 emissions, targeting blast furnace and direct-reduced-iron applications.
The steel industry is simultaneously navigating a power crisis it didn't create and a capital influx it has long needed, with the outcome of both still far from certain.
