International Steel Prices

World vs. US HRC Price Spread

Written by Brett Linton

The spread between world hot rolled export pricing and that of the domestic average here in the United States remains reasonable based on our analysis of steel pricing data from this week. As the spread narrows, the competitiveness of imported steel into the United States is reduced. Over time, if the trend continues, the domestic (U.S. and Canada) steel mills will be in a better position to regain some of the market share lost to foreign steel imports, especially on flat rolled steel products in the coming months (second half 2015).

The following calculation is used by Steel Market Update in order to identify the spread between world hot rolled export prices as determined by SteelBenchmarker and domestic (US) hot rolled prices determined by SMU. SMU compares the world hot rolled export price to which dollars are added for freight, handling, trader margin, etc. The number generated is then compared to the spot (FOB Mill) domestic hot rolled price using the SMU Hot Rolled Index average for this week, with the result being the spread between domestic and world hot rolled coil (HRC) pricing.

The world export price for hot rolled bands is $411 per net ton ($453 per metric ton) FOB the port of export according to data released by SteelBenchmarker on Monday of this week. This is down $18 per ton from the previous release in early-February and down $28 per ton from late-January.

SMU uses a minimum of $70 to as much as $100 per ton which is then added to the export number in order to get the steel to ports in the United States (freight, handling, and trader margin). This additional cost more closely mirrors the “true” world HR export price ranging from $481 to $511 per ton CIF USA Port.

The latest Steel Market Update hot rolled price average is $500 per ton for domestic steel; this is down $10 from early-February and down $40 per ton from late-January. The theoretical spread between the world HR export price and the SMU HR price is $11 to $19 per ton ($89 prior to import costs), up $8 per ton from our previous analysis but down $12 from late-January.

Although up over our previous analysis, the $11 to $19 spread remains low in comparison to previous months. The previous spread of -$19 to $11 was the lowest seen since late-May 2013 when we had a spread of -$20 to $10 per ton ($80 prior to import costs). In 2014, the highest spread seen was in mid-May at $84 to $114 per ton ($184 prior to import costs). One year ago the spread was $27 to $57 per ton ($127 prior to import costs).

The above numbers are based on “theoretical” calculations. Where prices and price offers “should” be if the world export number is correct.

In spot checking the HRC numbers being offered into the Gulf ports we are hearing offers in the $440-$480 per ton range. With domestic mill prices piercing through the $500 per ton level on the bottom end of our range, even with the lower foreign numbers the appetite to buy will be lower depending on the freight situation.

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 FOB 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.

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

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

Latest in International Steel Prices