Foreign vs. Domestic Hot Rolled Prices in July

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, July 4, the CRU German HRC price was $588 per net ton, down $4 from the previous week. Adding $90 per ton for import costs, that puts the price at $678 per ton from Germany delivered to the U.S. The latest Steel Market Update hot rolled price average is $910 per ton for domestic steel, unchanged from last week. The spread between German and U.S. HR prices is now +$232 per ton, up from +$228 last week, and up from +$222 two weeks ago. That means domestic HR is now theoretically $232 per ton more expensive than importing HR steel from Germany. This spread has risen consecutively for the past three weeks. The four-week average price spread is now +$220 per ton, up from +$212 last week.

CRU published Italian HRC prices at $550 per net ton, up $7 from the week prior. After adding import costs, we get a delivered price of approximatley $640 per ton. The spread between the Italy and U.S. figure is +$270 per ton, down from +$277 one week ago, and +$272 two weeks ago. Meaning that U.S. HR is theoretically $270 per ton more expensive than importing steel from Italy. The four-week average is now +$267, up from +$263 last week.

The CRU Chinese HRC price remained steady at $538 per net ton. Adding import costs, that puts the price at $628 per ton. The spread between the Far East and U.S. figure is +$282 per ton, unchanged from one week ago, and up from +$273 two weeks ago. That means domestic HR would theoretically be $282 per ton more expensive than importing steel from China, if Chinese mills were able to ship to the United States, which they are not. Prior to this week, the spread had risen for the previous two weeks. The four-week average price spread is now +$274 per ton, up from +$270 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.