HRC vs. prime scrap widens again in July

Written by Ethan Bernard & Stephen Miller

The spread between domestic hot-rolled coil and prime scrap prices widened further in July, a trend that started back in September. It’s at its widest level since April 2022.

SMU’s average HRC price was $1,160 per short ton (st) FOB mill, east of the Rockies, as of Tuesday, July 14. That’s flat from the previous week and a $30/st hike from a month earlier.

Meanwhile, busheling tags increased $2.50 per gross ton (gt) in July from June, averaging $462.50/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 $747/st as of Tuesday, up $28/st from a month earlier. For the second consecutive month, it’s at levels not seen since 2022 (Figure 2).

What’s going on?

This is much the same as last month, but the widening was less severe. The price of #1 Busheling is approximately the same as it was in June.

The price for HRC continued to increase, and it widened the spread between the two.

Looking ahead, it looks like the rate of increase in HRC could be peaking. There is a contingent of scrap players who speculate busheling prices could rise in the near future, especially with supply reductions and the possibility of steep pig iron tariffs. (Note, it appears pig iron is exempt from the new 25% tariff on Brazilian imports.) If this does happen, this may narrow this large 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 hold a 151% premium over prime scrap, up from 146% a month prior.

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.