December steel scrap prices finally showed a slight increase, giving us hope for 2026. Are the factors driving the increase real enough to have staying power into the new year or is this just the same old seasonal story?
There are some good reasons for optimism.
- Low interest Rate environment driving the economy:
- Today’s expected Fed rate cut had some dissent, but there was not much in the Jerome Powell press conference or reaction that indicated that future cuts were off the table. This lower interest rate environment is always good for economic activity and we should at least get the beneifts of this early in the year.
- Steel dependent sectors look poised for a rebound
- Housing, construction, infrastructure, the data center ecosystem, heavy equipment and machinery are all industries targeted for a better 2026 than 2025 and one thing they have in common is that they all use a great deal of steel.
- More steel mill capacity coming on line
- Electric Arc Furnaces (EAFs) use up to 90% recycled scrap steel in their blends and this type of technology is being added all over the USA! In fact by the end of the year Nippon Steel is to select the site for two new operations with a capacity to melt 3 million tons of crude steel. Some of the factors on where the mills will be built include access to raw materials (scrap steel!). The blast furnace in Granite City, IL will be restarted and a new slag mill in Pittsburgh could potentially start operations next year. Additionally new operations in neighboring Mexico and all around the world will not operate in a vacuum–they will be competing with domestic mills for material which will help support pricing of scrap steel metal.
On the flip side there are plenty of reasons to doubt that this slight uptick will last for that long. Taking a look at Fastmarkets data there has been a clear trend the past three years, and the December increases could be more of the same. (all pricing is Philadelphia market for busheling, #1 heavy melt very similar trends)
According to the data, each of the last three years has seen an uptick at the beginning or end of each year (winter season) that has failed to give any momentum to steel pricing throughout the rest of the year.
2023 Steel Busheling
Range for the year $380-$520 a ton, with a peak in March and steady declines down $140 a ton through the end of the year.
2024 Steel Busheling
January peak of $460/gt dropping down to $360/gt by the end of the year with only one up month all year!
2025 Steel Busheling
Peak of $460/gt in March for one month, began and ended at $380/gt.
With this past history of only a few months of good news and many months of decline, with the good months typically being in cold weather you can understand why market pessimists could be excused if they are not all that excited by the December 2025 uptick in pricing.
As we move into 2026 one thing is for sure, if we get past the first few months with a pricing uptick there is plenty of room to the upside, with prices nearly two times higher than they are now in the not so distant past. So, now is the time to get that scrap steel, galvanized, rebar, lite iron, equipment, machinery and vehicles ready for a trip to the scrap yard as prices could finally be on the move upward!
