Foundations: How to Read Mill Capacity Maps (and Turn Them Into Money)

Why these maps aren’t “maps”—they’re operating models

A mill capacity map looks static—dots on a page with nameplate tons per year—but in the real world it’s a dynamic demand engine. Every new EAF, BF→EAF conversion, and hybrid EAF/DRI line changes (1) what grades get bid up, (2) how far scrap must travel, and (3) which substitutes become economical. Treat the map like a living model: it tells you where melt happens, what quality is required, and when demand pulses will hit.

The three lenses you need to overlay on any capacity map

Metallurgy & Product Slate

What they make determines what they need.

Flat-rolled/exposed automotive: tight residuals → high prime intensity (busheling/bundles/prompt returns).

Long products/rebar/merchant bar: tolerant of variability → higher obsolete ratios (shred/demolition, upgraded where needed).

Advanced high-strength/galv lines: narrow windows for Cu, Sn, P, N—forces prime or near-prime blends plus tighter incoming COA controls.

Radius Economics

Melt demand forms a catchment radius that expands or contracts with price. Delivered cost = yard collection + processing + loading/handling + line-haul (truck/rail/river/short-sea) + unload.

Rule of thumb: when local yards tighten, mills “buy miles.” Your job is to know when the additional lane (rail, barge, container) turns green on a delivered-$ basis.

Substitute Metallics

HBI/DRI/pig iron can replace part of the prime requirement. But the break-even swings with FX, ore/gas prices, and freight. Substitutes are shock absorbers for prime scarcity, not perfect replacements.

Grade taxonomy (with decision consequences)

Prime (busheling/bundles/prompt): low residuals, predictable density/yield → priced at a structural premium where flat-rolled EAFs cluster.

Obsolete (auto shred, demolition, No. 1/2): abundant but variable → economically upgradeable with pre-sort, heavy media, LIBS/XRF, de-tinning, briquetting.

Prompt Industrial Returns: functionally prime-like but often captive to OEM contracts; access is about relationships and take-or-pay discipline.

Residuals, windows, and why COA discipline pays

EAFs manage process windows—ranges for Cu, Sn, P, S, N, tramp elements, and coatings carryover. When residuals creep up, the mill must either:

tighten the blend (buy more expensive prime),

add substitutes (HBI/DRI), or

trim output specs (rare, margin-hurting).

Suppliers who prove incoming quality (COAs, digital product passports, lot-level trace) turn scrap into an engineered input and justify premiums.

Freight math that actually drives decisions (worked example)

You quote a mill $CPT mill gate number. Your cost stack:

Yard buy: $320/gt

Processing/upgrade: $18/gt

Load/handling: $6/gt

Truck (140 miles) at $4.25/mi, 22 net tons avg payload → $4.25 × 140 / 22 ≈ $27/gt

Unload/admin: $4/gt

Delivered cost: $375/gt

If the mill is bidding $392/gt delivered, your gross margin ≈ $17/gt. When local competition lifts yard buy to $332, your delivered cost becomes $387 and margin compresses to $5—until a rail option (45/gt all-in) from 420 miles away pencils at $382 delivered, restoring margin. This is the moment the map “moves.”

Spreads that “talk” (and what they’re saying)

BUS–SHRED: a real-time proxy for prime scarcity vs. obsolete abundance. Rising spread → mills chasing cleaner inputs; watch flat-rolled clusters.

HBI–BUS: substitute metallics competitiveness. When HBI delivered < BUS + (upgrade premium), mills lean into DRI pellets/HBI to preserve specs.

HRC–SCRAP (or rebar–shred): margin headroom; when product–scrap spread narrows, mills resist paying up or cut melts.

The time axis: announcements vs. actual melt

Commissioning → hot trials → ramp curve → debottleneck: demand ramps in waves, not a switch. Expect tightening before nameplate as mills pre-contract feedstock and again during post-outage restarts. Align your offers to those waves.

How to “read” a region (repeatable field method)

Pin new/expanded EAFs. Draw 300–500 mile rings.

Overlay prime generators (auto stampers, white goods) and obsolete density (ELV yards, demo permits, urban centers).

Mark railheads, river terminals, export docks (container and bulk).

Tag substitute nodes (HBI import docks, pig-iron suppliers).

Add power tariffs and curtailment risk (EAFs are electricity hungry; power shocks change melt cadence).

Sequence ramp dates/outages; map them to regional spreads to anticipate the bid.

Bridge to Part 2

With these foundations—metallurgy → grade need, radius → delivered cost, substitutes → break-evens, and spreads → signals—you’re ready to zoom into EAF appetite, scenario analysis, and playbooks for dealers, mills, and buyers. That’s where Part 2 picks up: turning this map into trades, contracts, and capacity-aligned sourcing strategies.

3. EAF Appetite: A New Chapter for Scrap Demand

The expansion of electric arc furnace (EAF) capacity is fundamentally rewriting the rules for global scrap steel demand. With each new mill, the steel scrap landscape becomes more complex—and potentially more rewarding for those who understand its nuances.

How EAFs Consume Scrap—and What Types Matter Most

EAFs thrive on steel scrap as the main feedstock, typically consuming around 75–100% scrap in their charge mix. The three main categories of scrap—prime (busheling, bundles), obsolete (auto shred, demolition scrap), and prompt industrial returns—each have their own supply chains, pricing dynamics, and market participants.

Prime scrap, produced from manufacturing offcuts, is prized for its low impurity content and reliable composition. As high-spec steel products (such as automotive or appliance steels) gain popularity, EAFs chase higher shares of prime scrap, resulting in tighter regional competition and upward price pressure.

Obsolete scrap, sourced from post-consumer goods and demolition materials, is more abundant and variable in quality. EAFs involved in producing long products or rebar can efficiently utilize higher ratios of obsolete scrap, but increased demand from infrastructure projects and urbanization is making this resource more contested.

Verified Stats: EAF Share of Global Steel Production

As of 2023, EAFs accounted for nearly 30% of global steel output, with the U.S. hitting a robust 71% EAF share of total production, according to the World Steel Association. China, historically reliant on blast furnaces, is targeting over 20% EAF production by 2030—a move with seismic implications for the worldwide scrap market.

The “Scrap Gap”: Is There Enough Supply?

With multi-million-ton EAF projects in the pipeline, the question arises: Is the scrap supply base deep enough to satisfy future demand? Industry research from CRU Group and Fastmarkets estimates that the incremental scrap demand from new U.S. EAFs alone will exceed 5–7 million short tons per year by 2027, primarily in prime grades. This accelerates a trend where higher-quality scrap becomes a strategic asset, not just a commodity.

Emerging Technologies and Scrap Quality

EAF operators are investing in advanced raw materials sorting and pre-treatment technologies—think optical sorting systems, heavy media separation, and precision spectroscopy—to upgrade obsolete scrap to near-prime quality. This technological leap aims to bridge the “scrap gap” and allows more flexible feedstock sourcing even as the hunt for prime intensifies.

Bottom Line:

Whether you’re a metallics trader, scrap yard operator, or steel buyer, anticipating the EAF-driven evolution of scrap demand is vital to keeping your competitive edge.

4. Scenario Analysis: Where Will Scrap Flows Surge?

Forecasting scrap flows in the era of new EAF capacity requires both granular market intelligence and the analytical rigor to simulate different scenarios. Below, we break down how shifting mill maps are likely to redirect scrap streams—complete with real-world case studies and future projections.

Case Study 1: U.S. Midwest Corridor—A New Scrap Magnet

Situation: The addition of over 6 million tons of annual EAF capacity in the U.S. Midwest (Indiana, Ohio, Kentucky) from major players like Nucor, Steel Dynamics, and Cleveland-Cliffs between 2024 and 2027.

Impact: Scrap dealers within a 300-mile radius report tightening supplies and more aggressive competition for prime busheling, with regional prices for high-grade scrap outpacing national averages by 5–10%. Rail and truck logistics networks are under increased strain as scrap is ferried from farther afield.

Outcome: Scrap generators are locking in longer-term supply contracts, while new entrants pursue aggregation strategies to capture markups on consolidated volumes.

Case Study 2: Europe’s Green Steel Initiatives Refocus Scrap Flows

Situation: ArcelorMittal, SSAB, and other European majors are transitioning legacy blast furnace assets to hybrid EAF/DRI setups to meet emissions reductions.

Impact: High-quality scrap historically exported to Turkey or Asia is being redirected back into European supply chains. CRU Analytics notes a projected 900,000-ton annual reduction in EU scrap exports by 2026 as in-region consumption climbs.

Outcome: Turkish EAF mills intensify their own global scrap sourcing (notably from the U.S. East Coast), resulting in dynamic trans-Atlantic price arbitrage and volatile monthly buying patterns.

Scenario Modeling: Global Scrap Shortfalls and Opportunities

Using capacity maps and anticipated EAF start-ups, scenario modeling reveals likely pressure points:

- North America: By 2027, prime scrap premiums could reach unprecedented highs as mills “bid away” volume from auto stamping plants and industrial generators.

- Asia-Pacific: As Japanese and South Korean mills scale up EAF use, regional scrap self-sufficiency will determine whether Asia becomes a net importer or remains balanced.

- Emerging Markets: India, Vietnam, and Southeast Asia are expanding EAF capacity but lack deep domestic scrap pools, heightening demand for containerized imports from North America and Europe.

Statistical Insights

According to The Bureau of International Recycling (BIR), global traded scrap volumes hit 105 million metric tons in 2022—a 10% year-over-year increase, with further acceleration likely as more EAFs become operational.

5. Actionable Takeaways for Buyers and Sellers

How should market participants recalibrate their strategies in light of the new EAF and mill capacity maps? Here are specific, actionable steps for different stakeholders in the metallics value chain:

For Scrap Dealers and Recyclers

- Invest in Advanced Sorting: Upgrading facilities to supply EAF-ready, higher-purity scrap will yield pricing premiums, particularly for prime and high-demand obsolete grades.

- Secure Supply Contracts: Build direct relationships with local manufacturers, auto plants, and demolition contractors to create defensible, long-term supply channels.

- Expand Geographic Reach: Leverage data on mill start-ups to identify underserved regions and position your business for cross-state or cross-border shipments.

For EAF Operators and Steelmakers

- Diversify Sourcing Pools: Avoid over-reliance on local scrap by exploring multi-region procurement and long-term partnerships with recyclers.

- Invest in Feedstock R&D: Deploy technologies that can upgrade lower-grade or mixed scrap, offsetting prime tightness and supporting sustainable operations.

- Engage in Policy Advocacy: Actively participate in trade and environmental policy debates to ensure regulatory stability for scrap imports and exports.

For Steel Buyers and End-Users

- Monitor Capacity Announcements: Stay ahead of supply/demand swings—and potential price surges—by tracking EAF project timelines and corresponding changes to mill capacity maps.

- Assess Supply Chain Resilience: Work with suppliers who demonstrate robust scrap procurement strategies and can weather regional tightness.

- Factor in Green Steel Credentials: With EAFs at the heart of decarbonization, prioritize sourcing from mills with demonstrably lower carbon intensity, adding value for ESG-minded customers.

Pro tip: Regularly reviewing real-time mill capacity maps, export flows, and even regional rail/truck congestion data narrows the risk window and unlocks new sourcing opportunities that competitors could miss.

Final Section — Macro Trends, Projections, and a Data-Driven Edge (Staying Ahead of the EAF Curve)

Macro currents reshaping the next 3–5 years

Decarbonization is redirecting melt

BF→EAF conversions and hybrid EAF/DRI projects lift structural scrap intensity. Regulatory frameworks (recycled-content targets, carbon border adjustments, disclosure rules) convert documented low-residual inputs into priceable premiums.

Structural prime tightness, technological obsolete “lift”

Prime grows with manufacturing activity (and yields), not just price. Meanwhile, sorting + pre-treat + briquetting upgrades obsolete to “near-prime,” compressing the quality gap where capex is deployed. Regions investing in tech become grade alchemists.

Substitutes as volatility valves

HBI/DRI/pig iron usage rises when delivered BUS premiums spike; falls when ore/gas/freight/FX swing the other way. Expect short cycles in the HBI–BUS parity and opportunistic blend shifts.

Trade lanes in motion

Cleaner-scrap pull inside Europe reduces export float; Turkish and Asian EAFs compensate via trans-Atlantic and containerized pulls, intermittently tightening U.S. East Coast basins. Arbitrage windows open and close faster as data improves.

Power and logistics as invisible price setters

EAF utilization is sensitive to power tariffs/curtailments. Simultaneously, rail dwell, truck spot rates, river levels, and port congestion can override grade fundamentals in the short run.

Quantitative projections (how this likely expresses in prices and flows)

BUS–SHRED premium remains structurally elevated around clusters of new flat-rolled EAF capacity; expect episodic spikes around auto model changeovers and post-outage restarts.

Green differentials expand where mills can prove lower Scope 2/3 using documented feed + renewable power claims; buyers in auto/appliance/construction pay for compliance and brand risk reduction.

Tech leaders (yards with spectroscopy sorting, heavy media, de-coating/de-tinning) expand their acceptable scrap window and push delivered metal units per MWh higher—sustainable margin advantage.

The substitution math you’ll actually use (simplified)

Let:

BUS delivered = B

HBI delivered (per metal ton equivalent) = H

Upgrade obsolete to near-prime adds U/gt

Target residual limit forces prime share p

Decision guardrails:

If H < B − U → increase HBI share (protects residuals while easing BUS spend).

If U < B − H → invest in upgrading obsolete (capex if sustained).

If B, H both rise but product–scrap spread narrows → cut melt or re-price sales; don’t chase unhedged inputs.

What to track weekly (a real, working checklist)

Capacity & outages: start-ups, ramps (%), planned/unplanned stops; link each to its catchment radius.

Spreads: BUS–SHRED, HBI–BUS, HRC–SCRAP (or rebar–shred). Configure threshold alerts where parity flips.

Flow indicators: EU export prints, US East Coast loadings, Turkey buy programs, container rate indices.

Logistics friction: rail dwell, truck spot, barge draft/river levels, port queue metrics.

Energy/FX: power tariffs by ISO, natgas benchmarks, USD/EUR/TRY (import math for substitutes).

Quality variance: COA drift on Cu/Sn/P/S; flag lots that narrow the mill’s process window.

Policy tape: recycled-content mandates, quota/tariff changes, carbon accounting rules that alter “green premium” eligibility.

Tooling stack (practical, buildable)

GIS + Layers: mill pins, 300–500 mile rings, rail/barge/port nodes, HBI/pig-iron import nodes.

Quality layer: yard-level grade mix, upgrade capability, historical COA distribution, contamination flags.

Now-casting: simple regressions (e.g., BUS–SHRED ~ local melt utilization + export pull + truck spot).

Alerting: notify when arbitrage > freight + handling, or when HBI–BUS crosses your substitute threshold.

Contract intelligence: indexation formulas tied to verifiable documentation (COAs/DPPs) so green premiums are collectible, not theoretical.

How to act—concretely

Pre-position and pre-contract: When overlapping catchments point to tightening, secure prime/prompt volumes early; stage containers/railcars near the right nodes.

Engineer the blend: Maintain playbooks for (BUS-heavy), (upgrade-heavy), and (HBI-heavy) recipes; switch based on parity alerts, not gut feel.

Monetize proof: Package lots with transparent trace and clean COAs; shorten mill approval cycles and lift ASPs with compliance value.

Trade the calendar: Sell into restart ramps and quarter-end inventory targets; buy back into maintenance lulls.

Keep a “radius ladder”: For each mill, know your next-best lane (rail, barge, short-sea) and its ready-to-ship cost so you can lengthen the radius the moment local bids cap out.

Bottom line

The winners won’t just “have supply.” They’ll see where demand tightens before it shows up in published prints—by fusing capacity timelines, spread signals, logistics friction, and proven quality data. That’s how you sell the right metal units, at the right spec, into the right radius—ahead of the market’s repricing.