Can 13 million tons of prime steel scrap truly support the US HRC market? - Fastmarkets

2022-11-28 04:34:28 By : Mr. Mark Ding

We asked Lisa Gordon, Senior price reporter at Fastmarkets, about the looming prime steel scrap shortages and the potential impact on the US steel hot-rolled coil market. Watch the interview and read the below summary.

Steel hot-rolled coil (HRC) accounts for more than half of the steel production and shipments in the US — and production of this high-quality flat steel product requires access to an abundance of high-quality steel scrap. Brick Red Iron Sheets

The recipe for HRC is basically prime scrap, shredded scrap, plate and structural scrap. Mills can’t use grades like heavy melt to produce HRC, which explains why so much attention is paid to the looming shortage.

In the early 1970s, over 40 million(m) tons of prime steel scrap were generated in the US, but since then, supplies have been shrinking each year to around 13m tons today.

The problem is that there are more than 13m tons of HRC capacity coming online or planned to come online in the next three years.

13m tons might seem like a decent amount until you consider that over 13m tons of new HRC capacity will come online over the next three years. The additional capacity will require a minimum of 5.2m tons of prime scrap if only using it at a 40% ratio.

To tackle the prime shortage, some steelmakers have adapted their scrap strategies to incorporate more shred and less prime steel scrap into their production mix. Steelmaker Cleveland Cliffs have managed to shift to a 40% prime to 60% shred production ratio. Cliffs estimate the additional capacity will require an extra 9m tons of prime in the short- to mid-term.

Steelmakers are aware of the shortage and are being proactive to get ahead of the situation. Our Chicago No1 busheling price has been a trusted benchmark for the US prime steel scrap industry, helping mills levy raw material surcharges.

Join Lisa Gordon and other scrap industry experts in January at Scrap & Steel North America 2023. Register today and kick-start 2023 at the only event in the market to fully focus on scrap and the wider steelmaking raw materials.

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