According to the weekly MITI data tracked by us, the prices of scrap iron have inched up to a new high while the prices of steel billet and steel bar have touched their historical high again.

Despite the increase in average selling price for steel manufacturers, one should not ignore the fact that the increase in scrap iron price and iron ore is increasing the raw material cost for steel companies.

Companies that operate an electric arc furnace (EAF) use 100% steel scrap in general. Companies that operate a blast furnace produce pig iron from iron ore for subsequent processing into steel.

We shall wait till the spread between the scrap iron and iron billet expands (Similar situation in Feb 2021) before we start investing in steel manufacturing companies.

Track the prices of scrap iron, steel billet, and steel bar here: