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, Oct. 2, the CRU German HRC price was $449 per net ton, down $9 from the previous week and down $16 from two weeks prior. Adding tariffs and import costs, that puts the German price at $651 per ton delivered to the U.S. The latest SMU hot rolled price average is $525 per ton, down $25 over last week and down $35 from two weeks prior. Therefore, domestically sourced HRC is theoretically $126 per ton cheaper than imported German HRC; the spread was $113 last week and $111 two weeks ago. U.S. prices have have held this advantage for 46 consecutive weeks now.

Italian HRC

CRU published Italian HRC prices at $421 per net ton, down $10 over last week and down $18 over two weeks ago. After adding tariffs and import costs, the delivered price of Italian HRC is approximately $616 per ton. Therefore, domestic HRC is theoretically $91 per ton cheaper than imported Italian HRC; the spread was $79 the previous two weeks. U.S. prices have have now held this advantage for 26 consecutive weeks.

Far East Asian HRC

The CRU Far East HRC price fell $10 over last week at $402 per net ton, down $13 from two weeks prior. Adding tariffs and import costs, the delivered price of Far East HRC to the U.S. is $593 per ton. Therefore, U.S. produced HRC is theoretically $68 per ton cheaper than imported Far East Asian HRC; the spread was $55 last week and $49 two weeks ago. Domestic prices have have held this advantage for 34 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.