International Steel Prices
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/media/k2/items/src/8d99deee661e4f6f88117ff3a9193d91.jpg)
Analysis of World Export vs. Domestic Hot Rolled Coil Price Spread
Written by Brett Linton
March 31, 2016
The following calculation is used by Steel Market Update to identify the spread between world hot rolled export prices as determined by SteelBenchmarker and domestic (US) hot rolled prices as published by SMU. Steel Market Update compares the world hot rolled export price to which dollars are added for freight, handling, trader margin, etc. The number generated is then compared to the spot (FOB Mill) domestic hot rolled price using the SMU Hot Rolled Index average for this week, with the result being the spread between domestic and world hot rolled coil prices. This is a “theoretical” calculation as freight costs, trader margin and other costs can fluctuate ultimately influencing the true market spread.
This theoretical price spread analysis is based on our review of world export prices and the hot rolled steel price index produced by SMU earlier this week. As the spread narrows, the competitiveness of imported steel into the United States is reduced. If it widens, then foreign steel becomes more attractive to U.S. flat rolled steel buyers.
The world export price for hot rolled bands is $291 per net ton ($321 per metric ton) FOB the port of export according to data released by SteelBenchmarker earlier this week. This is up $20 from the previous release on March 14th and up $34 per ton compared to the mid-February price.
SMU uses a minimum of $70 to as much as $100 per ton for freight, handling, and trader margin, which is then added to the export number in order to get the steel to ports in the United States. This puts the “theoretical” selling price for hot rolled coil exported to the United States as ranging from $361 to $391 per ton CIF USA Port.
The latest Steel Market Update hot rolled price average is $440 per ton for domestic steel, up $10 per ton compared to the last time we did an update on world prices and up $35 per ton over our mid-February price. The theoretical spread between the world HR export price and the SMU HR price is $49 to $79 per ton ($149 prior to import costs), down $10 from our previous analysis but up $1 from mid-February.
The $49 to $79 spread is around $5-10 per ton less than the average spread over the last few months. Our spread back in early February of $63 to $93 per ton was the highest spread seen since late-November 2014 when the spread was $66 to $96 per ton ($166 prior to import costs). In January through May 2015 we had more narrow spreads, some negative (meaning theoretically that domestic steel was cheaper than foreign steel); this time last year, it was -$6 to $24 ($94 prior to import costs). In early February 2015 the spread was -$19 to $11 ($81 prior to import costs), the lowest seen since late-May 2013. The widest spread seen between foreign and domestic HRC in 2015 was in mid-August at $42 to $72 per ton ($142 prior to import costs).
We also took a look at Platts Black Sea price which was reported to be $362.50 per metric ton ($328 per net ton). Using the same formula as above the “theoretical” price into the US is $398-$428 per net ton.
SMU spoke with one of our Asian sources who advised us that hot rolled for export out of China is currently $380 per metric ton ($345 per net ton). This means if the Chinese were able to ship HR to the United States (which they cannot at this time) their “theoretical” price into the US is $415-$435 per ton. Only a very few weeks ago HR was being offered at $330-$360 CIF, Duty Paid, Gulf Coast Port…
Freight is an important part of the final determination on 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 a graph comparing 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 view the graph on our website to use it’s interactive features, you can do so by clicking here. If you need assistance with either logging in or navigating the website, please contact us at 800-432-3475 or info@SteelMarketUpdate.com.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/04/SMU_BL_headshot-V4-150x150.png)
Brett Linton
Read more from Brett LintonLatest in International Steel Prices
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/09/SMU_CR_ForeignVs.Domestic_2024-0906_Thumbnail.png)
US CR price spread with imports widens further
The price gap between US cold-rolled (CR) coil and offshore product has widened again. The premium has grown repeatedly since falling to a 10-month low in late July.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/09/SMU_ForeignVs.Domestic_2024-0905_Thumbnail.png)
Domestic HR prices remain higher than import tags
US hot-rolled (HR) coil prices were largely flat over the past week, remaining higher than tags for offshore material on a landed basis for a second consecutive week.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/08/SMU_ForeignVs.Domestic_2024-0829_Thumbnail.png)
Domestic HR prices rise above import tags
US hot-rolled (HR) coil prices continue to move higher, surpassing tags for offshore material on a landed basis. Domestic prices, improving on the heels of firmer US mill offers, pulled ahead of import tags as the stateside gains this week were sharper than the increases in overseas markets. SMU’s check of the market on Tuesday, […]
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/08/SMU_CR_ForeignVs.Domestic_2024-0823_Thumbnail.png)
Domestic CRC price spread with imports widens
The price gap between US cold-rolled (CR) coil and imported CR has widened since falling to a 10-month low in late July.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/08/SMU_ForeignVs.Domestic_2024-0822_Thumbnail.png)
Domestic, imported HR prices level again
US hot-rolled (HR) coil prices continue to inch up and are now roughly even with prices for offshore material on a landed basis. The closing of the gap between cheaper US prices and more expensive import tags was driven by improving domestic prices on the heels of firmer US mill offers. SMU’s check of the […]