Can 13 million tons of prime scrap truly support the US HRC market?

Recycled metals including prime steel scrap are becoming the gold standard commodity for producers and consumers of quality, low-carbon metals. Follow the discussion as our Senior expert Lisa Gordon analyses the impact of prime scrap shortages on the US HRC market

We asked Lisa Gordon, Senior price reporter at Fastmarkets, about the looming prime steel scrap shortages and the potential impact on the US steel hot-rolled coil market. Watch the interview and read the below summary.

How important is prime steel scrap to US HRC production?

Steel hot-rolled coil (HRC) accounts for more than half of the steel production and shipments in the US — and production of this high-quality flat steel product requires access to an abundance of high-quality steel scrap.

The recipe for HRC is basically prime scrap, shredded scrap, plate and structural scrap. Mills can’t use grades like heavy melt to produce HRC, which explains why so much attention is paid to the looming shortage.

Is there enough prime steel scrap to feed the growing US HRC market?

In the early 1970s, over 40 million(m) tons of prime steel scrap were generated in the US, but since then, supplies have been shrinking each year to around 13m tons today.

The problem is that there are more than 13m tons of HRC capacity coming online or planned to come online in the next three years.

13m tons might seem like a decent amount until you consider that over 13m tons of new HRC capacity will come online over the next three years. The additional capacity will require a minimum of 5.2m tons of prime scrap if only using it at a 40% ratio.

To tackle the prime shortage, some steelmakers have adapted their scrap strategies to incorporate more shred and less prime steel scrap into their production mix. Steelmaker Cleveland Cliffs have managed to shift to a 40% prime to 60% shred production ratio. Cliffs estimate the additional capacity will require an extra 9m tons of prime in the short- to mid-term.

Steelmakers are aware of the shortage and are being proactive to get ahead of the situation. Our Chicago No1 busheling price has been a trusted benchmark for the US prime steel scrap industry, helping mills levy raw material surcharges.

Join Lisa Gordon and other scrap industry experts in January at Scrap & Steel North America 2023. Register today and kick-start 2023 at the only event in the market to fully focus on scrap and the wider steelmaking raw materials.

What to read next
Copper scrap discounts in the United States were stuck in a holding pattern on Wednesday December 7, while brass prices consolidated recent gains amid rising prices on The Commodity Exchange (Comex)
Our experts take a deep dive into how mortgage rates are impacting housing affordability and how that impacts lumber prices
Seaborne manganese ore prices in China ticked upward in the week to Friday December 2 but doubt remained whether this was an indication of an upward trend or just a short-term shift
Global nickel premiums were under pressure from weak demand in the week to Tuesday December 6, with the premium for nickel 4x4 cathode in Rotterdam widening downward, while the others were flat
Fastmarkets is proposing to launch two daily indices for 67.5% Fe iron ore pellet feed to reflect the spot price of high-grade pellet feed products sold on a CFR China basis.
Fastmarkets is proposing a realignment of its consumer buying prices for No1 busheling scrap in North Carolina and South Carolina respectively, effective from the January 2023 monthly settlement.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.