HRC vs. scrap spread widens over $150/ton in March

Our average HRC price as of March 18 stands at $950 per short ton (st) FOB mill, east of the Rockies, even with last week. Compared to a month earlier, HRC prices have risen $135/st from $815/st.

Meanwhile, busheling tags also jumped month over month in March. They are up $27.50 per gross ton (gt) from last month, averaging $475/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 $526/st as of March 18. That’s an increase of $166/st from the previous month (Figure 2). This is the widest margin since the middle of February of last year when it hit $534/st.

What’s going on?

The new Section 232 tariffs have enlivened HRC prices going into March. Busheling prices have been on the rise as well, but not to the extent of HRC.

The blanket tariffs on Canada and Mexico, which were thought to include ferrous scrap, were suspended until April. This eased the expected pressure on busheling, which rose about $30/gt in most major steelmaking areas. 

The Canadian shippers used this tariff pause to empty their yards, thereby taking advantage of the price jump, and lessening the potential effects of threatened tariffs.     

If tariffs on Canadian/Mexican scrap are imposed in April, busheling prices could rise further. If HRC levels out, the spread could narrow somewhat.

HRC premium as a percentage

The chart on the right-hand side below shows the spread relationship differently: We have graphed HRC’s premium over busheling scrap as a percentage. HRC prices now have a 100% premium over prime scrap. That’s up from 70% a month prior.