The cost to convert shredded scrap into rebar is a moving target, making it hard to point to an exact profit margin, according to Frediani.

However, the historically wide spreads between the two products throughout 2022 have largely been driven by rebar market demand remaining strong enough to support high price levels while wider demand for scrap metal has softened, indicating that rebar producers’ profit margins have widened significantly as well.

“The disconnect between rebar and scrap prices is the consequence of strong rebar demand from the construction sector,” Frediani said. “Scrap prices have fallen in recent months as demand from flat steel producers is weak.”

Rebar prices have not entirely avoided the general weakening of steel prices from the past several months, falling by 11.50% to current levels from an all-time high of $1,130 per short ton in June 2022.

Still, the price has held up considerably better than that of shredded scrap, which has fallen by 21.43% from $437.50 per short ton in the same time frame.

“While we have seen a slowdown in residential construction in recent months, this was starting from very high levels and mills have remained busy so far,” Frediani said.