Steel Products Prices North America

World Export vs. Domestic HRC Price Spread down $8 per ton

Written by Brett Linton

June 12, 2014

World export prices for hot rolled bands was pegged at $504 per net ton ($556 per metric ton) according to data released by SteelBenchmarker earlier this week. This world hot rolled export price is up $3 per ton compared to the last set of data received about two weeks ago. With an estimated $70 per ton in freight, handling and trader margin added in order to get the steel to ports in the United States, the additional costs puts the world price at approximately $574 per ton CIF USA Port. The latest Steel Market Update hot rolled price average is $670 per ton, unchanged from the previous week but down $5 per ton from two weeks ago. The theoretical spread between the world export price and the SMU US HRC price is now $166 per ton ($96 with freight costs included), $8 per ton less than what we reported two weeks ago and $18 per ton less than 1 month ago.

The $96 spread represents a significant change from mid-March 2014 when we had a spread of $45 per ton ($115 prior to freight and other costs being added). One year ago the spread was $101 per net ton prior to freight, handling and traders margin which we calculate to average about $70 per ton. So, at this time last year, there was little incentive to buy foreign hot rolled coil.

That is not the case this year and hot rolled is not the only product being impacted by spreads exceeding $100 per ton. In the past, when dealing with foreign traders U.S. buyers of steel would require a spread of at least $60 per ton. However, since 2004, 2006 and 2008/2009 when flat rolled steel price volatility went off the charts, steel buyers began holding back purchases of foreign steel until the spreads hit $100 per ton. At $100 per ton most buyers are comfortable that their inventories will not get burned should U.S. steel prices fall during the period of time it took to deliver the foreign orders.

Below is an interactive graph which you can use to compare world export prices against the SMU domestic HRC average price. We also have included a comparison with freight and traders’ costs added which gives you a better indication of the true price spread (assuming the U.S. offers are not being bumped up by the foreign producing mills or trading companies). You will need to read this article on our website in order to see and interact with the graphic. If you need assistance with either logging in or accessing the article in the format you wish to read it in please contact our office: 800-432-3475 or info@SteelMarketUpdate.com.

{amchart id=”130″ Domestic vs. Foreign Hot Rolled Pricing- Steel Benchmarker World China Europe}

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.

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