Foreign vs. Domestic Hot Rolled Prices: U.S. Attraction Slipping?

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 antidumping (AD) or countervailing duties (CVD) in this analysis.

German HRC

As of Wednesday, Jan. 22, the CRU German HRC price was $471 per net ton, up $16 over the previous week and up $13 from two weeks prior. Adding tariffs and import costs, that puts the German price at $679 per ton delivered to the U.S. The latest SMU hot rolled price average is $590 per ton, down $20 over last week and unchanged over two weeks prior. Therefore, domestically sourced HRC is theoretically $89 per ton cheaper than imported German HRC; the spread was $49 last week and $73 two weeks ago. U.S. prices have held this price advantage for 62 consecutive weeks now.

Italian HRC

CRU published Italian HRC prices at $439 per net ton, up $7 from last week and up $11 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 $49 per ton cheaper than imported Italian HRC; the spread was $20 the previous week and $35 two weeks prior. U.S. prices have now held the price advantage for 42 consecutive weeks.

Far East Asian HRC

The CRU Far East Asian HRC price remained unchanged over last week at $467 per net ton, up $9 from two weeks prior. Adding tariffs and import costs, the delivered price of Far East Asian HRC to the U.S. is $674 per ton. Therefore, U.S.-produced HRC is theoretically $84 per ton cheaper than imported Far East Asian HRC; the spread was $64 last week and $73 two weeks ago. Domestic prices have held this price advantage for 50 consecutive weeks.

The graph below compares all four price indices and highlights the effective date of the tariffs. Foreign prices are referred to as “equalized,” meaning they have been adjusted to include tariffs and importing costs for a like-for-like 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.