Steel Products
Scrap Price Drop Helps Put HRC Prices Above SMU Fair Value Model
Written by John Packard
February 11, 2013
This week, the SMU Fair Value HRC (hot rolled coil) Model has spot HRC pricing above Fair Value for the first week after three consecutive weeks of being below the Fair Value price. This is due to the SMU average spot HRC index increasing $10 to $620 per ton and scrap inputs slightly decreasing $5 to $10 per ton. The Fair Value model now shows HRC prices $4 above the estimated Fair Value price.
As a reminder, the Fair Value HRC Model below came from the SMU acquisition of Steel Reality. The graph below demonstrates the relationship between scraps inputs creating an estimated “Fair Value” for HRC versus the actual spot price.
John Packard
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