WHAT IS SCRAP?
All steel is 100% recyclable without loss of quality, any recycled steel is reused as scrap. There are a few different kinds of scrap: Prime, Shredded, and Heavy Melt Scrap. Prime is generated in the steel making process or from service center processing. Shredded comes from old automobiles; after cars are shredded the recyclable steel is separated by magnets. Heavy Melt Scrap typically comes from demolished buildings, truck frames, and heavy-duty springs.
HOW IT AFFECTS THE MARKET?
Historically, mini-mills typically used 100% scrap as an input into the furnace while integrated producers typically used 10-25% scrap in their production processes. Around two-thirds of the steel produced in the US alone is made from scrap. Mini-mills are especially impacted by scrap pricing. If scrap prices rise, so does the cost for mini-mills to produce steel.
WHAT SHOULD YOU DO?
Watch how much scrap is being used and what’s being produced. China is the leading user of scrap; when considering usage that’s a good place to start. When thinking about the largest exporters to watch, focus on the US and Canada. Majestic’s CORE Report follows scrap usage and exports; along with other indicators every week to see where the market stands.