A New Look at Foreign vs. Domestic Hot Rolled Prices

SMU adds $90 per ton to these foreign prices taking into consideration freight costs, handling, trader margin, etc. This provides an approximate “CIF U.S. ports price” that can then be compared against the SMU U.S. hot rolled price, with the result being the spread (difference) between domestic and foreign hot rolled prices. As the price spread narrows, the competitiveness of imported steel into the United States is reduced. If the spread widens, then foreign steel becomes more attractive to U.S. flat rolled steel buyers. A positive spread means U.S. prices are higher than foreign prices, while a negative spread means U.S. prices are less than foreign prices. PLEASE NOTE: HRC prices are being affected by 25 percent tariffs, which brings new offers well above $800 per ton from the limited number of suppliers even quoting HRC.

As of Wednesday, June 13, the CRU German HRC price was $599 per net ton, up $7 from the previous week. Adding $90 per ton for import costs, that puts the price at $689 per ton from Germany delivered to the U.S. The latest Steel Market Update hot rolled price average is $885 per ton for domestic steel, unchanged from last week. The spread between German and U.S. HR prices is now +$196 per ton, down from +$203 last week, and down from +$206 two weeks ago. That means domestic HR is now theoretically $196 per ton more expensive than importing HR steel from Germany. This spread has declined consecutively for the past three weeks. The four-week average price spread is now +$204 per ton, up from +$201 last week.

CRU published Italian HRC prices at $545 per net ton, up $1 from the week prior. After adding import costs, we get a delivered price of approximatley $635 per ton. The spread between the Italy and U.S. figure is +$250 per ton, down from +$251 one week ago, and +$252 two weeks ago. Meaning that U.S. HR is theoretically $250 per ton more expensive than importing steel from Italy. This is the second week-over-week decline in this price spread. The four-week average is now +$251, up from +$243 last week.

The CRU Far East price remained steady at $560 per net ton. Adding import costs, that puts the price at $650 per ton. The spread between the Far East and U.S. figure is +$235 per ton, unchanged from one week ago, and down from +$253 two weeks ago. That means domestic HR is now theoretically $235 per ton more expensive than importing steel from East or SouthEast Asia. Prior to this week, the spread had declined for the previous two weeks. The four-week average price spread is now +$248 per ton, down from +$251 last week.

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. When considering lead times, a buyer must take into consideration the momentum of pricing both domestically and in the world markets. In most circumstances (but not all), domestic steel will deliver faster than foreign steel ordered on the same day.

We will soon develop graphics for this dataset and expand our analysis further. If you have any suggestions, feel free to share them with us: info@SteelMarketUpdate.com.