Foreign vs. Domestic Hot Rolled Price Spread

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 18, the CRU German HRC price was $595 per net ton, down $1 from the previous week. Adding $90 per ton for import costs, that puts the price at $685 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 +$225 per ton, up from +$224 last week, and down from +$232 two weeks ago. That means domestic HR is now theoretically $225 per ton more expensive than importing HR steel from Germany. The four-week average price spread is now +$227 per ton, unchanged from last week.

CRU published Italian HRC prices up $1 over last week to $560 per net ton. After adding import costs, we get a delivered price of approximately $650 per ton. The spread between the Italy and U.S. figure is +$260 per ton, down from +$261 one week ago and +$270 two weeks ago. Meaning that U.S. HR is theoretically $260 per ton more expensive than importing steel from Italy. This is the third consecutive week that the spread has declined. The four-week average is now +$267, down from +$270 last week.

The CRU Far East HRC price remained steady at $551 per net ton. Adding import costs, that puts the price at $641 per ton. The spread between the Far East and U.S. figure is +$269 per ton, unchanged over last week and up from $263 from two weeks ago. That means domestic HR would theoretically be $269 per ton more expensive than importing steel from East or Southeast Asia. This is the sixth consecutive week that the spread has remained steady or risen. The four-week average price spread is now +$266 per ton, up from +$262 last week.

On a monthly basis, CRU publishes hot rolled export prices for Turkey, CIS and Brazil. Through mid-July, the Turkey export price was $544 per ton, up $9 from the previous month. After import costs, the spread between Turkey and the U.S. price is $276 per ton, up from $260 one month ago. The mid-July CIS export price was $517 per ton, up $23 from last month. After import costs, the spread between the CIS and U.S. price is $303 per ton, up from $301 one month ago. The mid-July Brazil export price was $572 per ton, unchanged over mid-June. After import costs, the spread between the Brazil and U.S. price is $248 per ton, up from $223 last month.

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.

The graphic below shows all four weekly price indices above. We plan to turn this into an interactive graphic and add a webpage in the ‘Steel Prices’ section of our website soon.