International Steel Prices

Analysis of World Export vs. Domestic Hot Rolled Coil Price Spread

Written by Brett Linton

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. Steel Market Update 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 prices. This is a ‘theoretical’ calculation as freight costs, trader margin and other costs can fluctuate.

This theoretical price spread analysis is based on our review of world export prices and the hot rolled steel price index produced by SMU earlier this week. As the spread narrows, the competitiveness of imported steel into the United States is reduced. If it widens then foreign steel becomes more attractive to U.S. flat rolled steel buyers.

Over the past few months the trend has been for a narrowing of the spread between foreign and domestic steel. This should result in lower imports of foreign steel in the coming months. However, with the recent price announcements and increases in pricing the spread has started to widen which could pose a problem for the domestic mills should the spread get out of hand (widen too much).

The world export price for hot rolled bands is $345 per net ton ($380 per metric ton) FOB the port of export according to data released by SteelBenchmarker earlier this week. This is down $3 per ton from the previous release in mid-May and down $9 per ton from one month ago.

SMU uses a minimum of $70 to as much as $100 per ton for freight, handling, and trader margin, which is then added to the export number in order to get the steel to ports in the United States. This puts our ‘theoretical’ selling price for hot rolled coil exported to the United States as ranging from $415 to $445 per ton CIF USA Port.

The latest Steel Market Update hot rolled price average is $465 per ton for domestic steel; this is down $5 from mid-May but up $20 per ton from one month ago. The theoretical spread between the world HR export price and the SMU HR price is $20 to $50 per ton ($120 prior to import costs), down $2 per ton from our previous analysis but up $29 from one month ago.

The $20 to $50 spread is slightly higher than the spreads we have seen over the past few months. Prior to mid-May, the last time the spread was this high was in mid-January, at $22 to $52 per ton ($122 prior to import costs). The spread in early February 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 $74 to $104 per ton ($174 prior to import costs).

The above numbers are based on ‘theoretical’ calculations. This is where we believe prices and price offers should be if the SteelBenchmarker world export number is correct.

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.) or in the case mentioned above the Mexican border. 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}

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