Hot Rolled vs Scrap Price Spread Narrows

Written by Brett Linton

The spread between hot-rolled coil (HRC) and prime scrap prices continues to narrow, according to Steel Market Update data. Busheling scrap prices have declined each of the last four months, as have hot-rolled prices – but at a greater rate than scrap. The result: a shrinking delta between the two products. The latest spread is one-third what it was this time last year, but it is still higher than pre-pandemic levels.

Our hot rolled coil price average rose $15 per ton last week to $820 per net ton ($41.00 per cwt), the first week-over-week increase seen since mid-April. HRC prices had declined $90 per ton in the previous four weeks and are down $715 per ton since the start of the year. Compared to this time last year, hot rolled is down $1,080 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 last week at $435 per gross ton for August, down $70 per ton compared to July and down $340 per ton from April’s historic high. Compared to levels one year ago, August busheling prices are down $235 per ton. Prior to this year, the previous high for busheling scrap was $670 per ton in July and August 2021. Figure 1 shows price histories for each product.

After converting scrap prices to dollars per net ton for an equalized comparison, the differential between hot-rolled coil and busheling scrap prices is $432 per net ton, one of the smaller spreads seen in recent years (Figure 2). In last week of July, we saw a spread of $389, the second smallest figure seen since October 2020. The HRC/scrap price spread has averaged $415 per ton over the last four weeks, and had 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 $1,302 per ton, while in August 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 an 89% premium over prime scrap, having averaged 78% over the last four weeks. Back in early March, the premium reached a multi-year low of 43%, having fallen from a record high 236% premium last October. The same month one year ago, HRC held an average premium of 184% over scrap, while August 2020 saw an average premium of 80%. 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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