International Steel Prices

Foreign Price Advantage Over Domestic Hot Rolled Steel Fades

February 17, 2022

Foreign steel imports from the three regions tracked by Steel Market Update have nearly lost their price advantage over domestic steel, according to our latest foreign versus domestic hot rolled steel price comparison. Foreign HRC prices are now theoretically just $7-80 per ton cheaper than domestic steel, after taking freight costs, trader margins and tariffs into consideration. Recall that foreign imports held a strong advantage for a significant portion of 2021, with that appeal lessening after reaching record levels in September/October 2021.

The following calculation is used by Steel Market Update to identify the theoretical spread between foreign hot rolled steel prices (delivered to U.S. ports) and domestic hot rolled coil prices (FOB domestic mills). This is only a “theoretical” calculation as freight costs, trader margins, and other costs can fluctuate, ultimately influencing the true market spread. This compares the SMU U.S. hot rolled weekly index to CRU hot rolled weekly indices for Germany, Italy, and Far East Asian ports.

In consideration of freight costs, handling, trader margin, etc., we add $90 per ton to all foreign prices to provide an approximate “CIF U.S. ports price” that can be compared against the SMU U.S. hot rolled price. Recent spot checks show freight on SE Asian imports into Houston costing between $100-110 per ton and costs on European products between $85-90 per ton. Buyers should use our $90 rate as a benchmark, and adjust up or down to their own shipping and handling costs if necessary.

Note that effective Jan. 1, 2022, the traditional Section 232 tariff no longer applies to most imports from the European Union, it has been replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff, and comparisons to prior prices may be skewed. SMU still includes the 25% S232 tariff on foreign prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.

Far East Asian HRC (East and Southeast Ports)

As of Wednesday, Feb. 16, the CRU Far East Asian HRC price was up $36 week over week to $780 per net ton ($860 per metric ton), up $104 from one month prior. Adding a 25% tariff and $90 in estimated import costs, the delivered price of Far East Asian HRC to the U.S. is $1,065 per ton. The latest SMU hot rolled price average is $1,080 per ton, down $110 from one week ago, and down $345 from one month prior. Therefore, U.S.-produced HRC theoretically is now $15 per ton more expensive than imported Far East Asian HRC, down from $170 last week, and down from $490 one month ago. Recall that the early-September spread of $847 per ton was the largest theoretical spread between Far East Asian and domestic HRC prices in SMU’s four-year data history. Prior to 2021, the previous record high was $183 per ton in March 2018.

Italian HRC

CRU published Italian HRC prices at $910 per net ton ($1,003 per metric ton), up $13 from last week, and up $36 from one month ago. After adding import costs, the delivered price of Italian HRC is approximately $1,000 per ton. Accordingly, domestic HRC is theoretically $80 per ton more expensive than imported Italian HRC, down from $203 last week, and down from $461 one month ago. Prior to removal of the 25% tariff, the early-November spread of $577 per ton was the largest seen in SMU’s limited data history. Prior to 2021, the previous record high was $143 per ton in July 2016.

German HRC

The latest CRU German HRC price is $983 per net ton ($1,083 per metric ton), down $9 from last week, but up $13 from one month ago. After adding import costs, the delivered price of German HRC is approximately $1,073 per ton. Accordingly, domestic HRC is theoretically $7 per ton more expensive than imported German HRC, down from $108 last week, and down from $365 one month ago. Prior to removal of the 25% tariff, the mid-October spread of $504 per ton was the largest seen in SMU’s limited data history. Prior to 2021, the previous record high was $121 per ton in March 2018.

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 importing costs (and tariffs in some cases) 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.

By Brett Linton, Brett@SteelMarkeUpdate.com

Brett Linton

Brett Linton is a senior analyst for Steel Market Update, where he began his career. Linton has been in the steel industry since 2010. He has held roles as a category manager and strategic insights director at Reibus before returning to SMU in 2024. He is a graduate of The University of North Georgia with a degree in Finance and Accounting. Brett can be reached at brett@steelmarketupdate.com or 724-314-0179.