Foreign HRC Price Update: U.S. vs Germany, Italy and Far East Asia

SMU includes a 25 percent import tariff effective on foreign prices after March 23, 2018. We then add $90 per ton to the foreign prices in consideration of freight costs, handling, trader margin, etc., to provide an approximate “CIF U.S. ports price” that can be compared against the SMU U.S. hot rolled price. Note that we do not include any anti-dumping (AD) or countervailing duties (CVD) in this analysis.

German HRC

As of Wednesday, Sept. 18, the CRU German HRC price was $465 per net ton, down $6 from both the previous week and two weeks prior. Adding tariffs and import costs, that puts the German price at $671 per ton delivered to the U.S. The latest SMU hot rolled price average is $560 per ton, down $15 over both last week and two weeks prior. Therefore, domestically sourced HRC is theoretically $111 per ton cheaper than imported German HRC; the spread was $104 both last week and two weeks ago. U.S. prices have have held this advantage for 44 consecutive weeks now.

Italian HRC

CRU published Italian HRC prices at $439 per net ton, down $6 over last week and down $5 over two weeks ago. After adding tariffs and import costs, the delivered price of Italian HRC is approximately $639 per ton. Therefore, domestic HRC is theoretically $79 per ton cheaper than imported Italian HRC; the spread was $71 the previous week and $70 two weeks ago. U.S. prices have have now held this advantage for 24 consecutive weeks.

Far East Asian HRC

The CRU Far East HRC price held steady over last week at $415 per net ton, down $10 from two weeks prior. Adding tariffs and import costs, the delivered price of Far East HRC to the U.S. is $609 per ton. Therefore, U.S. produced HRC is theoretically $49 per ton cheaper than imported Far East Asian HRC; the spread was $34 last week and $46 two weeks ago. Domestic prices have have held this advantage for 32 consecutive weeks now.

The graph below shows all four prices together and points out the effective date of the tariffs. Foreign prices are referred to as “equalized,” meaning they have been adjusted with the tariffs and importing costs for an apples-to-apples comparison against the U.S. price.

Note: 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.