Hot Rolled vs Scrap Price Spread Narrows

Written by Brett Linton

The spread between hot-rolled coil (HRC) and prime scrap prices is back on the downward trend seen prior to the Russia-Ukraine war, according to Steel Market Update data through this week. The HRC-scrap spread peaked last September, falling to an 18-month low in early March and briefly rebounding through May. The latest spread is nearly a third of what it was this time last year but is still higher than pre-pandemic levels.

Our hot rolled coil price average fell $35 per ton this week to $875 per net ton ($43.75 per cwt), and is now at a 19-month low. HRC prices have declined $165 per ton in the last month, down $660 per ton since the start of the year. Compared to one year prior, hot rolled is down $975 per ton. Recall our HRC price peaked last September at $1,955 per ton, gradually falling to a low of $1,000 per ton in early-March. HRC prices then rapidly rose following the Russia-Ukraine war to $1,480 per ton in mid-April.

Busheling scrap prices settled earlier this month at $505 per gross ton for July, down $130 per ton from June and down $270 per ton from April’s historic high. Compared to one year prior, July busheling prices are down $165 per ton. (Prior to this year, the previous high for busheling was $670 per ton in July and August 2021). Figure 1 shows price histories for each product.

Converting scrap prices to dollars per net ton for an apples-to-apples comparison, the differential between hot rolled coil and busheling scrap prices is now $424 per net ton, as shown in Figure 2. The spread has averaged $454 per ton over the last four weeks, having peaked at $815 per ton in early May. Recall we saw an 18-month low spread of $375 per ton in early March, and a record-high spread of $1,428 per ton six months prior to that. This time last year, the spread was $1,252 per ton, while in July 2020 it was just $212 per ton. For comparison, the average spread throughout 2021 was $1,080 per ton, with 2020 averaging $310 and 2019 averaging $324.

PSA: Did you know our Interactive Pricing Tool has the capability to show steel and scrap prices in dollars per net ton, dollars per metric ton, and dollars per gross ton?

Figure 3 explores this relationship in a different way – we have graphed the spread between hot rolled coil and busheling scrap prices as a percentage premium over scrap prices. HRC prices now carry a 73% premium over prime scrap, having reached 106% in early May. Back in early March, the premium reached a multi-year low of 43%, having fallen from a record 236% last October. This time last year, HRC held an average premium of 172% premium over scrap, while July 2020 saw an average of 66%. HRC held the lowest premium over busheling scrap back in November 2011, when it reached 29%.

This comparison was inspired by reader suggestions; if you would like to chime in with topics you want us to explore, reach out to our team at

By Brett Linton,

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