Pre-buying steel coil right now is either the smartest move you make this year or the one that eats your line of credit alive. With Section 232 tariffs on steel and aluminum sitting at 50 percent following the June 2025 presidential proclamation, the math has shifted hard. I have watched contractors get rich on coil they bought six months ago. I have also watched contractors pay warehouse rent on inventory that did not move while their working capital sat frozen in a rack.
The tariff math changed the moment Section 232 hit 50 percent
Eighteen months ago, pre-buying coil was a margin play. You bought ahead, you saved three or four points, you held inventory for a quarter, you booked the spread. The downside was warehouse rent and a slow opportunity cost on your cash. Manageable.
Now the math is different. Section 232 tariffs on steel and aluminum doubled to 50 percent in June 2025 under Presidential Proclamation 10947. The Bureau of Industry and Security expanded the tariff scope to 407 derivative product categories in August 2025. Steel producer prices have moved materially over the last 18 months. Coil prices on common commercial gauges followed. That kind of move turns a margin play into a survival play for some shops and a wealth event for others. The difference between those two groups is not market timing. It is discipline.
The only good reason to pre-buy is sold work
I will say this plain. If you do not have signed contracts behind the coil you are buying, you are speculating. Call it what it is.
Speculation can work. Plenty of contractors made money on it in 2024 and 2025. But speculation is not a roofing business. It is a commodities trade you are running on the side, financed by your roofing credit line, with no risk controls and no exit plan if the trade goes against you.
The contractors I have seen win the pre-buy game over the last 18 months did one thing the speculators did not. They matched coil to contract. They had a backlog of signed work with material allowances priced at today’s coil cost, and they pre-bought against that backlog. The coil was already sold. The customer already accepted the price. The pre-buy was just a delivery and storage decision.
If a tariff hike comes mid-job and you have already locked your coil cost, you keep the margin you priced. If the customer cancels, you have a buyer for that coil because it was specced for a real building. The downside is a slow week of phone calls. The upside is your bid wins because you priced firm while everyone else added a 12 percent contingency.
What backlog visibility actually means
Backlog visibility is not a number on a spreadsheet. It is a question you should be able to answer cold. How much signed work do I have, in what months, requiring what gauge and what coating, and on what payment terms.
If you cannot answer that without pulling three reports, you do not have backlog visibility. You have a wish list.
Real visibility looks like this. You have 90 days of signed work in your hand. You know the metal building runs scheduled for July, August, and September. You know which contracts have material escalation clauses and which ones locked at bid. You know which projects are funded and which are still waiting on the owner’s bank. From that, you can tell me exactly how many tons of 24-gauge Galvalume in standard widths you will pull in the next quarter.
That is the number you pre-buy against. Not the number you hope to sell. The number that is sold, scheduled, and funded.
Carrying cost is real, and most contractors lowball it
Here is where contractors fool themselves. They run the savings math on the coil price and forget the carry.
Warehouse rent on conditioned racked coil storage varies by market. On top of the floor cost, add insurance, racking depreciation, forklift time, inventory shrink, and the cost of capital on the money sitting in that steel.
If your line of credit is at 9.5 percent right now and your coil cost is $42,000, you are paying $333 a month in interest carry alone. Hold that coil for four months and you have burned $1,332 in interest on a single roll, before warehouse rent, insurance, or the risk of damage.
The pre-buy math has to beat all of that, plus a margin of safety. Otherwise the savings on the coil price evaporate the longer it sits.
What happens if tariffs come down mid-year
This is the question every speculator should be losing sleep over.
The current tariff structure is a presidential proclamation, not legislation. It can be modified, expanded, or reduced by the same authority that imposed it. There are active legal challenges to the Section 232 framework. There are trading partners negotiating exemptions. The political calculus changes every quarter.
If tariffs come down materially mid-year, the coil you bought at the high is suddenly worth less on the open market. Your competitor who did not pre-buy is now bidding new work with a lower material cost than you are sitting on. Your customers with escalation clauses will renegotiate. Your customers without them will start asking why your price is higher than the other quote.
This is the asymmetric risk speculators ignore. Tariff goes up, you make money. Tariff comes down, you eat the spread. There is no upside cap and a real downside floor.
The way you protect against this is by matching coil to contract. If the coil is already sold at the higher price, a tariff drop does not hurt you. The customer paid the locked rate. You delivered the product. The trade is closed.
Passing pre-buy savings to customers without losing margin
One of the smartest plays I have seen this cycle is contractors using pre-buy savings as a closing tool, not a profit grab.
If you bought coil below current spot pricing, you have unrealized spread. The amateur move is to pocket all of it. The veteran move is to share some of it with the customer to win the bid.
Say a competitor is bidding at today’s spot-market coil pricing with a 12 percent margin. If your locked coil cost is lower, you can bid at a lower material price with a higher margin and still come in below them. You win the contract, you book a better margin than your competitor would have on the same job, and the customer feels like they got a deal. Everybody wins except the contractor who refused to pre-buy and has no negotiating room.
The principle is simple. Pre-buy savings are an asset. Use them to win work, not to inflate margin on work you would have won anyway.
How to know which game you are playing
Run this checklist before you pick up the phone to order coil.
- Do I have a signed contract behind every roll I am about to buy
- Is the contract priced with today’s coil cost or today’s coil cost plus a buffer
- What is the customer’s payment history, and is the project funded
- What is my fully loaded monthly carry per coil, including interest, rent, and insurance
- How long until I draw the coil down, in weeks
- What is my exit if the project pushes 90 days or cancels
- Does my line of credit have room for this purchase plus a 25 percent buffer for other working capital needs
If you can answer all seven cleanly, you are running a coil inventory strategy. If you cannot, you are speculating with your business as collateral.
The practical takeaway
Match coil to contract or do not buy. That is the whole rule.
Pre-buying against signed backlog with locked-rate contracts is a real margin tool that smart contractors are using to win work and protect cash flow. Pre-buying without sold work behind it is a commodities bet financed by your operating line, and you are not in the commodities business.
The contractors who will come out of this tariff cycle stronger are the ones who treat coil inventory like accounts receivable. Every roll has a name on it. Every roll has a delivery date. Every roll has a payment behind it.
If you are running a sheet metal or commercial roofing operation and you want to talk through where your backlog discipline is strong and where it is leaking, get in touch and we can walk through what your numbers actually say.
About Khary Penebaker
Khary Penebaker is Division President at MetalMaster-RoofMaster, the Upper Midwest division of Wolkow Braker Roofing Corp. He previously built Roofed Right America from startup to $35M+ in revenue with 180 employees (2014-2025) and founded Penebaker Enterprises, growing it from $1.5M to $15M. A gun violence prevention advocate and former Everytown for Gun Safety Fellow, Khary brings two decades of leadership in commercial roofing, architectural sheet metal, and civic engagement.
Common questions
How much coil should I pre-buy against signed backlog?
Only what is sold, scheduled, and funded. If you have 90 days of signed work with known gauge and coating requirements, that is your pre-buy ceiling. Buying beyond signed backlog turns coil from inventory into speculation, and speculation should never be financed on a roofing operating line.
What is the carrying cost on warehoused steel coil?
Plan for 35 to 60 cents per square foot per month in Midwest warehouse rent, plus 9.5 percent annualized interest on the cash tied up, plus insurance and shrink. On a 42,000 dollar coil held four months, the carry runs roughly 1,500 dollars before any rent. Most contractors lowball this number.
Can I pass pre-buy savings to customers and still hold margin?
Yes, if you treat the spread as a closing tool. Use part of the savings to undercut a competitor's bid while still booking better margin than they would have. Pocketing the full spread on work you would have won anyway is fine, but the smarter play is winning bids you would have lost at spot pricing.
What happens if tariffs come down mid-year?
Speculators eat the spread. If you bought coil at the 50 percent tariff price and tariffs drop 20 points, your inventory is suddenly above spot market and customers without escalation clauses will push back. Contractors who matched coil to signed contracts at locked rates are unaffected because the trade is already closed.
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Last updated: June 28, 2026