Hot Metal
Three things worth your attention this week.
Scrap and DRI prices don't move together, and that spread is the whole game: scrap follows collection economics, DRI follows pellets and gas. This week both legs are quiet. The benchmark import cargo into Turkey has moved five dollars in three weeks, to about $380 CFR, and 62% Fe ore sits at the top of the $93-100 band it has held since June. Calm tape is when the playbook gets written, not when the move comes.
Scrap quality erosion is the slow-motion story behind every mix model. Published analyses keep flagging rising residual levels in obsolete scrap pools as the goods being scrapped carry more copper and more electronics. For flat-product shops this converts straight into DRI demand, independent of price: dilution isn't optional when the order book says exposed grades. Worth re-reading your residual trend, not just your price sheet.
Fastmarkets suspended its Black Sea pig iron export assessment on Thursday, citing attacks on vessels and port infrastructure at Russia's Black Sea ports. That index priced a metallic Turkish EAFs have been buying hard: pig iron imports rose more than 60% last year, and the Russian share is now about nine-tenths. Lose the reference price for a substitute metallic and the mix model loses a comparison, not just a number. Pre-decided playbooks need pre-decided fallback prices.
A perishable decision
Ask a shop how it sets its scrap-DRI ratio and you'll usually hear a number with a history: "we run about 80-20" — set during some earlier price regime, defended by habit, revisited quarterly if the CFO asks. That cadence made sense when raw material prices moved quarterly. They don't anymore. The mix decision is now a perishable financial position, and the shops making money on it share one trait that has nothing to do with modeling sophistication: decision speed.
First, the right number, because most mix arguments die on the wrong one. Gate price per tonne of charge material is not it. The number is cost per tonne of liquid steel, adjusted for what each material actually delivers:
Yield. A tonne of DRI at 92% metallization and a tonne of clean shredded do not put the same iron units in the ladle. The FeO tax from issue #7 applies at purchasing, not just at the slag door. Divide every gate price by delivered liquid units before comparing anything.
Energy. Charge materials carry different energy bills: metallization, gangue-driven slag mass, the carbon credit from last week, scrap density and melting behavior. Published rules of thumb cover each term; your own heat data calibrates them better.
Residuals. Copper and tin don't average out. They accumulate, and they gate which grades you can cast. Published flat-product practice holds copper around a tenth of a percent or below for demanding exposed applications. This isn't a cost term; it's a feasibility wall, and DRI is the dilution that moves it. When scrap quality erodes, DRI carries option value beyond its invoice: it's what keeps the profitable half of the order book open.
Run that arithmetic once and you have a model. The competitive edge isn't the model; everyone's spreadsheet converges on similar math. The edge is cadence. Prices move weekly; a quarterly mix review means running up to twelve weeks of stale position. In shops we've watched handle volatility well, the pattern is the same: the mix model re-runs weekly with fresh prices and fresh assays, and — this is the part worth stealing — the responses are pre-decided. A playbook, agreed in calm weather: if the yield-adjusted spread crosses this line, shift the mix one step; two lines, two steps. When the move comes, nobody convenes a meeting. The meeting already happened.
Notice the asymmetry in the chart. The yield and energy terms lean against DRI in both regimes, so a DRI discount at the gate has to pay for them before it counts, while a scrap discount gets amplified. Same $70 spread, very different slopes. That's why the gate-price argument keeps losing money for people who think they're winning it.
Now the furnace's side, because the spreadsheet has no slag line. Mix changes have switching costs the model doesn't see: melt profiles tuned per charge type, flux standards, oxygen and carbon practice, feed-rate ramps, scrap logistics and yard space, take-or-pay clauses in supply contracts. A shop that whipsaws its mix on every price tick pays those costs weekly and confuses its crews for a margin the volatility already ate. The discipline that works is steps, not swings: pre-defined mix steps the furnace has profiles for, moved one at a time, with the heat model updated the same day. Fast decisions, slow movements.
The perishable thing is the decision, not the furnace. Decide weekly. Move deliberately.
Operator's Notebook — the weekly mix meeting, seven inputs
Thirty minutes, same day every week. No meeting without all seven numbers on one page.
Prices, landed. Scrap by grade and DRI, delivered-to-yard basis, not index headlines. Include freight and handling; the spread often lives there.
Current DRI certificate. Metallization and carbon, this week's cargo. The mix model is only as fresh as its worst input.
Scrap residual trend. Rolling copper and tin from melt-in assays, by supplier where you can. Three rising weeks is a decision, not an observation.
Order book residual ceilings. What the next 4-6 weeks of grades actually permit. The mix serves the book, not the spreadsheet.
Energy price position. Current power cost tilts the energy terms. Cheap power forgives cold, slaggy charges; expensive power doesn't.
Inventory and logistics. Yard levels, incoming commitments, contract minimums. A brilliant mix you can't physically assemble by Thursday is trivia.
Furnace readiness. Which mix steps have current, maintained melt profiles. If the answer limits the playbook, that's a standing action item: profile maintenance is mix optionality.
Close with one line, written down: mix for the week, the trigger levels that would change it mid-week, and who's authorized to pull the trigger without reconvening.
Next week: electrode consumption, one year later — the kg/t drivers, breakage anatomy, and the market since we first wrote about it.
Written by active DRI-EAF operators. Anonymous by necessity, specific by design.