HRC vs. busheling spread continues to widen in April

Written by Ethan Bernard & Stephen Miller

The spread between domestic hot-rolled coil and prime scrap prices widened again in April, a trend that started back in September.

SMU’s average HRC price was $1,050 per short ton, FOB mill, east of the Rockies, as of Tuesday, April 14. That’s up $10/st from the previous week and $35/st from a month earlier.

Meanwhile, busheling tags were flat again in April, averaging $460 per gross ton (gt).

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 $639/st as of Tuesday, April 14. That’s up $45/st from a month earlier. We have to go back to May 2023 to find a mark above this when it stood at $650/st (Figure 2).

What’s going on?

As HRC prices rise, the price of #1 busheling is struggling to keep up. The US scrap market in April was seasonally adjusting downward. But due to several factors, busheling maintained its March price level. This still was not enough to keep the HRC-busheling spread from widening.

One reason busheling traded sideways was that pig iron prices increased and were subject to a $45-50 per metric ton tariff. So, depending on the location of the HRC mill, the cost of using pig iron is well over $120/gt over busheling on a delivered basis.

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 hold a 128% premium over prime scrap vs. 118% the previous month.

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-plus 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.