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Forecasts and market analysis based on price assessments from Fastmarkets MB and Fastmarkets AMM

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November 2019 | Steel Forecaster


Margin Analysis: 4 November 2019


A roundup and analysis of margins for week of 4 November 2019.

Click here to view Key Region Margins


US HRC and rebar spreads over scrap



After the latest downtrend in US HRC prices, the HRC-scrap spread declined to $301 at the end of October. The last time the spread fell below the $300 level was at the end of July, when US coil mills announced three rounds of price hikes, and the fall in mills’ margins triggered price increases this time as well. The HRC index started to move up after the recent hikes, bringing the HRC-scrap spread to $318 last week, but this level is still 9% below the long-term average of $351. Rebar prices have also been on a decline but falls in scrap prices have been steeper. As a result, after the rebar-scrap spread bottomed out at $428 in August-early September, it has been fluctuating at above $450 (with the exception of one week in October). The year-to-date average spread is $455, 9% above the long-term value of $381, suggesting that even if mills have to lower their steel prices further, they still operate at favorable margins. All spreads quoted on a $ per tonne basis.


Definitions

Spread
Premium between a steel product and a steel raw material

Premium
Extra above the cost of the feedstock for the product next along the conversion chain

Differential
Difference between same type of product from different regions/benchmarks

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