SMU Analysis of World Export Price vs. USA Hot Rolled Index

SMU uses a minimum of $70 to as much as $100 per ton which is then added to the export number in order to get the steel to ports in the United States (freight, handling, and trader margin). This additional cost more closely mirrors the “true” world HR export price ranging from $534 to $564 per ton CIF USA Port. (Note that we were previously using $70 per ton to calculate the “true” world HR export price, but have since moved to a range of $70 to $100 per ton in order to provide a better estimation for our readers. This is because there can be a large range of freight charges moving steel from Europe or South America vs. Asia).

The latest Steel Market Update hot rolled price average is $630 per ton for domestic steel; this is down $5 from two weeks ago and unchanged from late-October. The theoretical spread between the world HR export price and the SMU HR price is $66 to $96 per ton ($166 prior to import costs), up $1 per ton from two weeks ago and up $19 from late-October.

Recent market checks put imported HRC offers into the Gulf ports at approximately $540 per ton.

Although up over the previous analysis, the $66 to $96 spread remains on the low side compared to the spread through the summer months. The lowest spread seen this year was in late-March when we had a spread of $31 to $61 per ton ($131 prior to import costs). By mid-May the spread expanded to $84 to $114 per ton ($184 prior to import costs). One year ago the spread was $63 to $93 per ton ($163 prior to import costs).

Freight is an important part of the final determination as to whether to import foreign steel or buy from a domestic mill supplier. Domestic prices are referenced as FOB the producing mill while foreign prices are FOB the Port (Houston, NOLA, Savannah, Los Angeles, Camden, etc.). Inland freight from either a domestic mill or from the port can dramatically impact the competitiveness of both domestic and foreign steel.

Below is an interactive graph which you can use to compare world HR export prices against the SMU domestic HR average price. We also have included a comparison with freight and traders’ costs added which gives you a better indication of the true price spread. You will need to read this article on our website in order to see and interact with the graphic. If you need assistance with either logging in or navigating the website, please contact our office at 800-432-3475 or info@SteelMarketUpdate.com.

{amchart id=”130″ Domestic vs. Foreign Hot Rolled Pricing- Steel Benchmarker World China Europe Prices}