← Business Metric: Industry Specific (Industrials & Materials) (all topics)
Spread - HRC to CRC (cold rolling)
What it is
The margin between hot-rolled coil, the input, and cold-rolled coil, the output. Cold rolling reduces thickness at room temperature, improving surface finish, dimensional tolerance and strength
A standalone cold roller buys HRC at market and sells CRC at market, so the spread is the entire economics of the business
Impact on industries
- A thin spread with no control over either side, so profitability is set by two prices the roller does not influence
- The supplier is often the competitor - integrated mills sell HRC to cold rollers while also selling CRC, which caps how wide the spread can go
- Downstream coating and colour-coating widen the spread materially, which is why standalone rollers move into galvanising and PPGI
- Structurally the same problem as the sponge iron-billet spread, the refiner's crack and the copper conversion charge - a single number is the business