SMU Summit 2024: What's driving scrap prices

In the U.S., does the scrap market drive the price of steel or vice versa?

Tom Knippel, vice president, ferrous, SA Recycling LLC, quipped that the answer is “yes.” His joke underscored the unexpected movements of the scrap market this year.

Knippel was one of three panelists who discussed the recycled metals market at Steel Summit 2024 in Atlanta. He was joined by Joe Pickard, chief economist and director of commodities for the Recycled Metals Association (ReMA) and Adina Renee Adler, executive director of the Global Steel Climate Council. The session was moderated by Lynn Lupori, head of consulting, Americas, for CRU Group.

“It’s been a very interesting year in that the price of scrap should have gone down earlier this year, in particular on exports going into Turkey,” Knippel told the crowd.

Hot-rolled coil has notably been a significant driver of scrap prices.

“Mills have improved the large volume of profits on that over the last two years,” he continued.

In August, RMU reported that many in the trade were disappointed that prices on ferrous scrap did not increase for August. But as of now most are concerned about September being weaker. The export market, which had held steady despite drops in domestic tags, deteriorated last month.

Our sister publication, Steel Market Update also reported in August the price spread between hot-rolled coil (HRC) and prime scrap widened slightly during the month but remains in low territory not seen since late 2022.

Meanwhile, the average HRC price rose as of August 20th, as did the August price for busheling scrap.

SMU’s HR coil price stands at $700 per short ton (st) on average as of August 27th, up $25/st from the prior week.

At the same time, busheling tags increased $20 month over month to an average of $395 per gross ton in August.

ReMA’s Pickard also points out that the number of scrap sellers exceeded the number of buyers. “It shouldn’t come as a huge surprise who has the market power in that dynamic,” Pickard said.

“Previously, we would always say that the scrap dealers tend to be the price takers because the development of prices is informed by demand, and so we tend to be the ones who adapt to the marketplace,” he said.

“There’s certainly a give and take on a monthly basis.”