Steel Summit 2024: What's driving scrap prices?

Knippel was one of three panelists who discussed the recycled metals market at Steel Summit 2024 in Atlanta. He was joined by Joe Pickard, chief economist and director of commodities for the Recycled Metals Association and Adina Renee Adler, executive director of the Global Steel Climate Council. The session was moderated by Lynn Lupori, head of consulting, Americas, for CRU Group.

“It’s been a very interesting year in that the price of scrap should have gone down earlier this year, in particular on exports going into Turkey,” Knippel told the crowd. “But scrap was not readily available.”

He noted that it ultimately comes down to supply and demand, but over the last year demand has been lacking.

“Scrap has been supported because it’s been in tight supply,” Knippel said.

However, hot-rolled coil has been a significant driver of scrap prices over the last couple of years.

“Mills have improved the large volume of profits on that over the last two years,” he continued.

In August, SMU reported the price spread between hot-rolled coil (HRC) and prime scrap widened slightly during the month but remains in low territory not seen since late 2022.

According to SMU’s most recent pricing data, the average HRC price rose as of Aug. 20, as did the August price for busheling scrap.

SMU’s HR coil price stands at $700 per short ton (st) on average as of Aug. 27, up $25/ton from the prior week

At the same time, busheling tags increased $20 month over month to an average of $395 per gross ton (gt) in August.

ReMA’s Pickard pointed out that scrap sellers outnumber the amount of buyers.

“It shouldn’t come as a huge surprise who has the market power in that dynamic,” Pickard said.

“Previously, we would always say that the scrap dealers tend to be the price takers because the development of prices is informed by demand, and so we tend to be the ones who adapt to the marketplace,” he said.

“There’s certainly give and take on a monthly basis.”