Foreign vs Domestic Hot-Rolled Price Analysis

In consideration of freight costs, handling and trader margin, we add $90 per ton to all foreign prices to provide an approximate “CIF US ports price” that can be compared against the SMU domestic HRC price. Spot checks show freight for Southeast Asian imports into Houston costing $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 It has been replaced by a tariff rate quota (TRQ).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. 24, the CRU Far East Asian HRC price declined $9 week-over-week to $544 per net ton ($600 per metric ton), unchanged compared to 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 $770 per ton. The latest SMU hot rolled average is also $770 per ton, down $30 week-over-week and down $70 per ton from one month ago. Therefore, US-produced HRC is now theoretically the same price as imported Far East Asian HRC. This is the first time Far East Asia has not held a price advantage to domestic steel since early-March 2022 (a position then held for just three weeks). Last week we saw a spread of $18 per ton (meaning Far East Asian imports were cheaper that domestic steel), compared to $70 per ton one month ago. This differential has overall eased since peaking at $375 per ton in May. 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 $670 per net ton ($738 per metric ton), down $34 per ton from last week and down $22 per ton compared to one month ago. After adding import costs, the delivered price of Italian HRC is approximately $760 per ton. Accordingly, domestic HRC is now theoretically just $10 per ton more expensive than imported Italian HRC. This is up from a spread of $6 per ton one week earlier, but down from $58 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 $29 per ton from last week to $696 per net ton ($767 per metric ton), down $69 per ton from one month ago. After adding import costs, the delivered price of German HRC is approximately $786 per ton. Accordingly, domestic HRC is now theoretically $16 per ton cheaper than imported German HRC, up from a spread of $15 per ton one week prior and one month ago. Prior to late June, German prices held the price advantage for 14 consecutive weeks 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