Trade, supply factors widen, then tighten spread
While rebar and scrap prices tend to be directionally correlated, developments on the trade front helped widen that gap, according to KeyBanc Capital Markets analyst Philip Gibbs.
“If you look at it over a two-year time frame, two years ago economic optimism was at a high. I think the benefits from the [Section 232 tariffs] and the limited amount of exclusions was palpable, so you had a peak pricing power, peak demand, and this was before some of the new capacity was either ingrained in the market or announced,” Gibbs said.
On a monthly average basis, the price spread between steel reinforcing bar (rebar), fob mill US and shredded auto scrap, delivered mill Chicago reached a recent peak - its widest since $482.86 per short ton in February 2009 - at $431.31 per ton in June 2019. The rebar price assessment averaged $670.60 per ton at the midpoint...