April 18, 2023
April Market Minute 2023
The Scrap-Steel Price Correlation
Roughly 70% of domestic steel makers use electric arc furnaces (EAFs) to produce steel. Busheling scrap is a primary input cost for making steel via EAF. This means that the price of scrap tends to have a direct correlation to the price of steel.
A look at the price of busheling scrap over the past 12 months paints a good picture of why steel prices have been spiking as of late:
Date | Price of hot-rolled steel/ton* | Price of busheling scrap/ton |
|---|---|---|
April 2022 | $1,456 | $760 |
July 2022 | $942 | $475 |
December 2022 | $664 | $355 |
January 2023 | $748 | $748 |
February 2023 | $852 | $445 |
March 2023 | $1,152 | $545 |
*Prices as of last week of the month.
It’s important to note that the price of scrap to the price of steel isn’t a one-to-one movement. This is due in part to Section 232 duties in the U.S. that prevent prices from fall too low.Â
Summing Up the Surcharges
As May prices for stainless steel surcharges begin to take shape, let’s take a quick look at which commodities play the biggest part in each surcharge.
Let’s start at the base: All stainless steels are made up of about 16-18% chromium, which helps these grades resist rust. The price of chrome is anticipated to be up 15% quarter-over-quarter.
From there, a mix of nickel, molybdenum, and other elements help the grades take shape, which means different grades are impacting by pricing trends in these commodities.
We Love Welders
Trade work is among the most important work when it comes to creating our society. At SteelNow, we help celebrate National Welders Month by encouraging you to give a listen to this podcast we did in October 2021 we call ‘Our Ode to the Trades’.