Understanding the US Midwest Shredded Auto Scrap to Rebar Differential

The steel industry has long relied on various pricing benchmarks to navigate market fluctuations and make informed business decisions. Fastmarkets' recent launch of the US Midwest shredded auto scrap to rebar differential (MB-STE-0935) represents a significant advancement in steel price transparency, offering stakeholders a powerful tool for margin analysis and strategic planning.

This new differential tracks the relationship between finished rebar products and one of their primary raw material inputs, providing critical insights into production economics within the steel value chain. By understanding this relationship, industry participants can better navigate commodity market volatility and optimize their operational strategies.

What is the New Steel Differential and Why Does It Matter?

The Strategic Launch of a New Market Benchmark

Fastmarkets officially introduced the US Midwest shredded auto scrap to rebar differential (MB-STE-0935) on July 23, 2025. This carefully developed benchmark provides a single reference point showing the price spread between finished rebar products and shredded auto scrap—one of the key raw materials used in rebar production via Electric Arc Furnace (EAF) technology.

As Amy Hinton from Fastmarkets' pricing team explains: “This strategic launch offers the market a single reference price denoting the differential between steel reinforcing bar and shredded auto scrap.” This level of transparency helps market participants understand cost-to-price relationships more effectively than tracking individual price assessments separately.

The Significance for Industry Stakeholders

This differential serves multiple critical functions across the steel supply chain:

For steel producers: Provides visibility into margin trends and production economics

For scrap suppliers: Offers insights into mill profitability that may influence purchasing behavior

For rebar consumers: Helps forecast potential price movements based on raw material cost fluctuations

For traders and financial institutions: Creates opportunities for risk management and strategic positioning

“The differential provides insights into profitability trends and pricing pressures across the steel value chain,” notes Dan Hilliard of Fastmarkets. “When the differential widens, it typically signals improving mill margins, while narrowing indicates margin compression.”

Industry analysts have observed that such differentials often serve as leading indicators for regional competitiveness and supply-demand imbalances, particularly when tied to automotive manufacturing cycles—a key source of prime scrap.

How Does the Differential Work?

Technical Specifications and Calculation Method

The differential calculates the price spread (in dollars per gross ton) between two existing Fastmarkets assessments:

MB-STE-0170: Steel reinforcing bar (rebar), fob mill US, $/cwt

MB-STE-0233: Steel scrap shredded auto scrap, consumer buying price, delivered mill Chicago, $/gross ton

This formula converts the rebar price from dollars per hundredweight (cwt) to dollars per gross ton (1 gross ton = 20 cwt) before calculating the spread. Raw material surcharges are included in the rebar price assessment, ensuring the differential accurately reflects the full production cost relationship.

Quality Requirements and Market Parameters

The differential adheres to specific quality and market parameters:

These specifications ensure the differential consistently tracks comparable products across both assessments, providing reliable data for market analysis and decision-making.