International Steel Prices

Appeal of Foreign Hot-Rolled Steel: Little to None

August 18, 2022

Foreign steel imports from the three regions tracked by Steel Market Update have all but lost their price advantage over domestic steel, according to our latest foreign versus domestic hot rolled steel price analysis. After taking freight costs, trader margins and tariffs into consideration, foreign HRC prices for one region are more expensive than domestic steel for the fourth consecutive week. The other two regions hold a 1–2% potential discount over domestic prices. For the past three months, the potential discount on imported products has been shrinking.

The following calculation is used by SMU 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.

In consideration of freight costs, handling, trader margin, etc., we add $90 per ton to all foreign prices to provide an approximate “CIF US ports price” that can be compared against the SMU US HRC price. Spot checks show freight for Southeast Asian imports into Houston costing between $100–110 per ton, costs for European products between $80–120 per ton, and costs for Turkish steel around $150 per ton. Buyers should use our $90-per-ton figure as a benchmark and adjust up or down based on their own shipping and handling costs as necessary.

If any of our readers have experience importing foreign steel and want to share your thoughts on these costs, we welcome your insight and comments: Brett@SteelMarketUpdate.com.

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 It has been replaced by a tariff rate quota (TRQ).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. 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, Aug. 17, the CRU Far East Asian HRC price was unchanged week-over-week at $553 per net ton ($610 per metric ton), up $9 per ton from one month prior. Adding a 25% tariff and $90 per ton in estimated import costs, the delivered price of Far East Asian HRC to the US is $782 per ton. The latest SMU hot rolled average is $800 per ton, down $20 week-over-week and down $75 per ton from one month prior. Therefore, US-produced HRC is now theoretically $18 per ton more expensive than imported Far East Asian HRC, down from a spread of $38 per ton last week and down from $105 per ton one month ago. This differential has overall eased since peaking at $375 per ton in May. Far East Asian HRC has held this price advantage for over five months now. The largest price spread between these regions was $847 per ton in September 2021, when Far East Asian prices held a considerable advantage.

Italian HRC

CRU published Italian HRC prices at $704 per net ton ($776 per metric ton), up $5 per ton from last week and flat compared to one month ago. After adding import costs, the delivered price of Italian HRC is approximately $794 per ton. Accordingly, domestic HRC is now theoretically just $6 per ton more expensive than imported Italian HRC, down from $31 per ton one week earlier and down from $81 per ton four weeks ago. The highest spread this year was $200 per ton in May. Italian hot-rolled has held this price advantage for the past five months. Prior to the removal of the 25% Section 232 tariff, the November 2021 spread of $577 per ton was the largest in SMU’s data history.

German HRC

The latest CRU German HRC price declined $21 per ton from last week to $725 per net ton ($800 per metric ton), down $46 per ton from one month ago. After adding import costs, the delivered price of German HRC is approximately $815 per ton. Accordingly, domestic HRC is now theoretically $15 per ton cheaper than imported German HRC, down from a spread of $16 per ton one week prior. Prior to the last week of June, German prices held the price advantage for 14 consecutive weeks; the spread was $14 per ton four weeks ago (meaning German imports were cheaper that domestic steel), and had reached a 2022 high of $164 in May. Prior to removal of the 25% tariff, the October 2021 spread of $504 per ton was the largest seen in SMU’s data history.

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 US 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 CIF 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.