U.S. steel mills are currently paying an average of $105 more per ton for prompt industrial grades of scrap compared with No. 1 heavy melting steel (HMS), according to transaction pricing from the Raw Material Data Aggregation Service (RMDAS) of MSA Inc. While prices for raw material inputs have remained relatively steady overall, a widening price spread continues to characterize the scrap market as domestic melt shops show a strong preference for cleaner, high-quality manufacturing offcuts.
Prompt Scrap vs. Obsolete Grades Pricing Dynamics
During the 30-day monitoring period stretching from late July through August 19, 2026, U.S. mills purchased No. 1 HMS at an average price of $366 per ton. In contrast, grades within the RMDAS prompt industrial composite mix—which includes No. 1 busheling, No. 1 bundles, and No. 1 factory bundles—commanded an average of $471 per ton. Meanwhile, No. 2 shredded scrap averaged $416 per ton, sitting $50 above No. 1 HMS and $55 below prime scrap.
Historically, markets value prompt scrap higher due to its superior chemical consistency and relative scarcity. When obsolete grades approach or exceed the value of prime scrap, a market correction typically follows, often driven by aggressive offshore demand from buyers in Turkey and other steelmaking regions. However, current market conditions show a stark contrast, with export demand remaining remarkably subdued.
Global Steel Pressures and Chinese Overcapacity
The lack of robust export demand for U.S. obsolete scrap is largely attributed to an overwhelming global supply of semi-finished and finished steel exported from the People’s Republic of China. Rather than utilizing regional scrap, rolling mills in Turkey, Malaysia, India, and across Asia have heavily relied on discounted Chinese steel imports.
Major recycling and steel enterprises have highlighted these macroeconomic headwinds. In recent earnings commentary, industry leaders from firms like Sims Ltd. and Radius Recycling pointed out that elevated Chinese steel exports into international markets continue to pressure regional prices, margins, and manufacturing activity. Consequently, North American scrap recyclers, particularly those near major export seaports, face lingering pressure despite steady domestic steel production end markets.
Market Impact
○ Impacted Metals: No. 1 Busheling, No. 1 Heavy Melting Steel, No. 2 Shredded Scrap, Prime Industrial Scrap
○ Direction: Mixed
○ Time Horizon: Q3 2026
○ Affected Industries: Steel Manufacturing, Metal Recycling, Industrial Procurement, Infrastructure, Construction
○ Related Price Reports: Stainless Steel Weekly Price Report
○ Watch Item: Monitor the monthly volume of Chinese semi-finished steel exports into Asian and European rolling markets to gauge recovery potential for U.S. scrap export demand.
SuperMetalPrice Commentary:
The persistent divergence between prime and obsolete scrap pricing underscores a market dictated by quality preference rather than tight overall supply. While domestic melt shops absorb high-cost industrial offcuts, the lack of traditional offshore demand highlights how Chinese export volumes continue to distort global scrap trade flows.
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