HRC-Bush Spread Analysis: Peaking Out After March Rebound?

Written by Brett Linton

According to the latest Steel Market Update data, the spread between hot rolled coil prices and prime scrap prices has leveled out over the past eight weeks, after reaching an 18-month low in early March. The latest spread through May 10 is down compared to this time last year, but still higher than pre-pandemic spreads.

The SMU hot rolled coil price average fell $75 per ton to $1,365 per net ton ($68.25 per cwt) as of last Tuesday, and is now at a seven week low. 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, reaching a high of $1,480 per ton in mid-April.

Busheling scrap prices settled last week at $700 per gross ton for May, down $75 per ton from April’s historical high and back in line with March levels. Prior to 2022, the previous high for busheling was $670 per ton in July and August 2021.

The differential between hot rolled coil and busheling scrap prices is now $665 per ton. The spread has averaged $696 per ton over the last four weeks, remaining between $665-740 per ton since late March. Recall we saw an 18-month low spread of $300 per ton in early March, which likely prompted a wave of price hikes. (Recall, too, that we saw a record-high spread of $1,365 per ton seen six months prior to that, which foreshadowed months of price declines). This time last year, the spread was $950 per ton, while in May 2020 it was just $150 per ton.

The chart below shows the same hot rolled vs scrap price spread, but with busheling scrap converted to dollars per net ton for an apples to apples comparison. 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?

With both products priced in dollars per net ton, the latest HR-scrap spread is $740 per ton, whereas the September high was $1,428 per ton. For comparison, the 2019 average spread was $324 per ton, the 2020 average was $310, and the 2021 average was $1,080.

The chart below 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 95% premium over prime scrap, having reached 105% in late March. In early March this premium reached a low of 43%, having fallen from a record 236% last October. This time last year HRC held a 161% premium over scrap, while May 2020 saw a 47% premium. 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,

The post HRC-Bush Spread Analysis: Peaking Out After March Rebound? appeared first on Steel Market Update.

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