Foreign HRC Price Update: U.S. vs Germany, Italy and Far East Asia

SMU includes a 25 percent import tariff effective on foreign prices after March 23, 2018. We then add $90 per ton to the foreign prices in consideration of freight costs, handling, trader margin, etc., to provide an approximate “CIF U.S. ports price” that can be compared against the SMU U.S. hot rolled price. Note that we do not include any anti-dumping (AD) or countervailing duties (CVD) in this analysis.

German HRC

As of Wednesday, Oct. 30, the CRU German HRC price was $441 per net ton, down $9 from the previous week and down $5 from two weeks prior. Adding tariffs and import costs, that puts the German price at $641 per ton delivered to the U.S. The latest SMU hot rolled price average is $480 per ton, up $10 over last week and unchanged from two weeks prior. Therefore, domestically sourced HRC is theoretically $161 per ton cheaper than imported German HRC; the spread was $183 last week and $168 two weeks ago. U.S. prices have have held this advantage for 50 consecutive weeks now.

Italian HRC

CRU published Italian HRC prices at $404 per net ton, down $12 over last week and down $9 over two weeks ago. After adding tariffs and import costs, the delivered price of Italian HRC is approximately $595 per ton. Therefore, domestic HRC is theoretically $115 per ton cheaper than imported Italian HRC; the spread was $140 the previous week and $126 two weeks prior. U.S. prices have have now held this advantage for 30 consecutive weeks.

Far East Asian HRC

The CRU Far East HRC price fell $3 over last week at $376 per net ton, down $14 from two weeks prior. Adding tariffs and import costs, the delivered price of Far East HRC to the U.S. is $560 per ton. Therefore, U.S. produced HRC is theoretically $80 per ton cheaper than imported Far East Asian HRC; the spread was $94 last week and $98 two weeks ago. Domestic prices have have held this advantage for 38 consecutive weeks now.

The graph below compares all four price indicies and highlights the effective date of the tariffs. Foreign prices are referred to as “equalized,” meaning they have been adjusted to include tariffs and importing costs for a like-for-like comparison against the U.S. 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 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. 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.