AI Data Centers Have Been Great for the Steel Industry. Now, a Power Crisis Looms.
The American steel industry is reaping the benefits of the AI data-center construction boom. But now, steelmakers are warning of a high-stakes competition with their data-center customers for a commodity they both require: electricity. Data centers’ insatiable demand for electricity is driving up power costs for steel companies by tens of millions of dollars a year and threatening the companies’ operations, according to a new report from the Steel Manufacturers Association.
“We as an industry are very reliant on electricity to make steel,” said Rob Simon, chief executive of JSW Steel USA, which uses an electric furnace at its Mingo Junction, Ohio, plant. “We’ve had stable electricity prices for decades, and now we think that’s at stake.”
Take Canton, Ohio-based Metallus, which melts scrap in an electric furnace to make its steel bars and other specialty steel products. The company said its electricity costs are about 70% higher since 2024, with annual increases running at about $15 million
Both companies’ plants are served by PJM Interconnection, the largest regional power grid in the U.S. Its area, which covers 13 states from the Midwest to the mid-Atlantic region, is also home to the country’s largest concentration of steel mills with electric furnaces. PJM said wholesale power costs in the region were up 76% in the first quarter from a year earlier.
Those increases coincide with the rise of data centers, which have voracious electricity needs. By 2030, data centers could use 9.5% to 15.3% of the electricity in the U.S., according to a new forecast by the Energy Department’s Lawrence Berkeley National Laboratory.
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