SMU Analysis of the Foreign vs. Domestic HRC Price Spread

With an estimated $70 to $100 per ton added in order to get the steel to ports in the United States (freight, handling, and trader margin), the additional costs put the “true” world HR export price at approximately $554 to $584 per ton CIF USA Port. (Note that we were previously using $70 per ton to calculate the “true” world HR export price, but have since moved to a range of $70 to $100 per ton in order to provide a better estimation for our readers.) We are hearing of new foreign hot rolled offers into the Port of Houston at $570 per ton. These prices are prior to any freight or storage fees which might be incurred at the port or moving the material from the port to the end customer.

The latest Steel Market Update hot rolled price average is $650 per ton, down $10 from three weeks ago and also down $10 per ton from early-September. The theoretical spread between the world HR export price and the SMU US HRC price is $66 to $96 per ton ($166 prior to import costs), down $10 per ton from three weeks ago and down $9 from early-September.

The $66 to $96 spread represents a significant change from mid-March 2014 when we had a spread of $15 to $45 per ton ($115 prior to import costs). One year ago the spread was $51 to $81 per ton ($151 prior to import costs).

Freight is an important part of the final determination as to 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.).

Below is an interactive graph which you can use to compare world HR export prices against the SMU domestic HR 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. 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 navigating the website, please contact our office at 800-432-3475 or info@SteelMarketUpdate.com.

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