Market Data

America Makes Steel From Scrap Now, and It Broke the Iron-Ore Signal

Generations of buyers learned that iron ore leads steel prices. That rule is quietly obsolete for US mill products, because most American steel is no longer made from ore at all. It is made from scrap, and the divergence between the two is a signal in itself.

A rule every steel buyer absorbs early is that iron ore leads steel: ore is the raw material, so its price telegraphs where finished steel is heading. For much of the world that still holds. For the United States it is quietly breaking, because most American steel is no longer made from iron ore. It is made in electric-arc furnaces from recycled scrap. That single fact severs the old signal, and you can watch it happen in the divergence between the ore price, currently $104/tonne (Jun 2026), up about 7.9% from a year ago, and the steel mill products index at 361.44 index (1982=100), up about 16.9% from a year ago.

Two ways to make steel, two different signals

Blast-furnace steel starts with iron ore and coke; electric-arc-furnace steel starts with scrap and electricity. They are different supply chains with different cost drivers, and the US has shifted heavily toward the electric-arc route. For a buyer, that means the leading indicator depends on which kind of steel they are buying. Ore leads integrated blast-furnace steel; the scrap market and power prices lead electric-arc steel. Watching ore to forecast a mill product that was actually made from scrap is watching the wrong raw material, and it will point the wrong way exactly when the two markets diverge.

The divergence is the signal

When ore and US steel prices move together, little is lost by watching either. It is when they diverge that the scrap story asserts itself, and that divergence carries information: steel rising while ore is flat or falling points to scrap tightness, power costs, or domestic demand driving the electric-arc route, none of which the ore price can see. A buyer who tracks the spread between the two, rather than ore alone, gets an early read on whether the pressure on US steel is coming from the raw-material side the old rule watches or the scrap-and-power side that increasingly sets the domestic price.

The oldest rule in steel buying assumes the metal starts as ore. For most American steel, it starts as a crushed car, and the ore signal never sees it coming.

What to watch instead

For US mill products, the more honest indicator set is scrap prices and industrial power, the two real inputs to the electric-arc furnace, with ore demoted to a supporting read for the shrinking blast-furnace share and for global context. Import volumes, at $2.21B (Jun 2026), up about 1.1% from a year ago, add the trade dimension, whether domestic mills are being undercut or protected. The practical upgrade is small but real: stop treating ore as the master key to US steel, watch the scrap-and-power drivers that actually turn the domestic mill, and read the ore-steel divergence as its own signal rather than a glitch.

Iron ore's six-year drift

The 34-year record shows iron ore making a full round trip, which is why point-in-time comparisons mislead so badly here. Its high came at the close of 2010 around $169, gave way over the following years to $41 by the end of 2015, and has climbed since to $104. That leaves it 38% below the peak and well off the floor, so whether today looks high or low depends entirely on which year you anchored to.

Use the metal price sensitivity calculator to see what a steel move does to your annual spend. Price your steel exposure

Published 2026-08-06.