Imports Still Cheaper Than Domestic Prices, But Spreads Narrowing

Foreign steel imports continue to hold a competitive price advantage over domestic steel, albeit at a slightly lesser potential discount this week compared to last. According to SMU’s latest foreign versus domestic hot-rolled coil (HRC) price comparison, select foreign HRC prices range from $92-345 per ton ($4.6-$17.25 per cwt) cheaper than domestic prices, after taking freight costs, trader margins and tariffs into consideration. The price differentials between domestic HRC and foreign import prices have been growing since mid-March, when domestic prices briefly held a competitive advantage over foreign imports.

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