What causes a steel roof to have red rust around fasteners and along the valley?

Most likely, the red rust is from filings (metal chips) that occur during the installation of the roof.

Most likely, the red rust is from filings (metal chips) that occur during the installation of the roof. Fasteners that drill through the steel and areas where panels need to be field cut to fit into valleys can leave behind metal filings that quickly rust because the bare carbon steel is exposed.  To prevent this, metal panels should be wiped down or blown off to remove filings from the surface of the metal panels. Red rust originating from metal filings is usually aesthetic in nature because the rusting is limited to the surface of the panel. However, if metal filing is ground into the surface from foot traffic, the exterior finish and/or metallic coating can be damaged which will lead to rusting of the steel roof panel.