HRC vs. prime scrap spread widens in June

Written by Ethan Bernard & Stephen Miller

The price spread between hot-rolled coil (HRC) and prime scrap widened slightly in June after narrowing for the two previous months, according to SMU’s most recent pricing data.

SMU’s average HRC price as of June 10 stands at $860 per short ton (st) FOB mill, east of the Rockies. That’s a $15/st jump from the previous week and the same time last month.

June busheling tags, however, came in sideways vs. May, averaging $425 per gross ton.

Figure 1 shows price histories for each product.

After converting scrap prices to dollars per short ton for an equal comparison, the differential between HRC and busheling scrap prices was $481/st as of June 10. That’s an increase of $15/st from a month earlier (Figure 2). It last widened in March when it stood at $526/st.

What’s going on?

Looking ahead to July, scrap prices are mostly expected to stay sideways.

On the other hand, HRC prices are set to increase further as the tariff increase has stirred pricing. This should continue to widen the spread.

HRC premium as a percentage

The graph on the right-hand side of Figure 2 shows the spread relationship differently: We have graphed HRC’s premium over busheling scrap as a percentage. HRC prices now have a 102% premium over prime scrap, up from 99% a month ago.

Ethan Bernard

Ethan Bernard is managing editor for Steel Market Update. He previously worked for American Metal Market as a copy editor in the New York office for two years, starting in 2008. Later, he copy edited AMM’s monthly magazine on a freelance basis from 2015 until 2017. With experience in financial copywriting and textbook publishing, he holds a BA in Comparative Literature from UC Berkeley, and an MFA. in Creative Writing from New York University. He can be reached at ethan@steelmarketupdate.com or 724-759-7871.

Stephen Miller

Stephen Miller started his career in the scrap metal industry in 1978 at Luria Brothers in Cleveland. Over the last 40+ years, he has worked in all capacities in the trading business. He has had positions in both domestic and international scrap trading. In addition to scrap, Miller was at the forefront of the pig iron trade and established a pig iron distribution company under the name of Ferrosource, Inc. Most recently, Miller has concentrated on the scrap export market and regularly does consulting for several companies in the industry.