International Steel Prices

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

Written by Brett Linton


This week’s SMU comparison of foreign and domestic hot rolled prices shows that U.S prices have started to gain a greater advantage over foreign imports, according to SMU and CRU indices. After shrinking in May, the price gap between domestic HRC compared to German and Italian imports has now slightly widened, while the East/Southeast Asian price spread widened by $25 per ton in two weeks.

The following calculation is used by Steel Market Update to identify the theoretical spread between foreign hot rolled steel prices (delivered to U.S. ports) and domestic hot rolled coil prices (FOB domestic mills). This is only a “theoretical” calculation as freight costs, trader margin and other costs can fluctuate, ultimately influencing the true market spread. We are comparing the SMU U.S. hot rolled weekly index to CRU hot rolled weekly indices for Germany, Italy and the Far East (East and Southeast Asian port).

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 antidumping (AD) or countervailing duties (CVD) in this analysis.

German HRC

As of Wednesday, June 17, the CRU German HRC price was $421 per net ton, unchanged over the previous week, but up $5 from two weeks prior. Adding tariffs and import costs, that puts the German price at $616 per ton delivered to the U.S. The latest SMU hot rolled price average is $500 per ton, down $15 over last week and down $5 over two weeks prior. Therefore, domestically sourced HRC is theoretically $116 per ton cheaper than imported German HRC; the spread was $101 last week and $105 two weeks ago. U.S. prices have held this price advantage for 18 consecutive months.

Italian HRC

CRU published Italian HRC prices at $390 per net ton, down $5 from last week and down $1 over two weeks ago. After adding tariffs and import costs, the delivered price of Italian HRC is approximately $578 per ton. Accordingly, domestic HRC is theoretically $78 per ton cheaper than imported Italian HRC; the spread was $69 the previous week and $74 two weeks prior. U.S. prices have held this price advantage for 14 consecutive months.

Far East Asian HRC

The CRU Far East Asian HRC price fell $2 per ton over last week to $397 per net ton, $16 higher than the price two weeks ago. Adding tariffs and import costs, the delivered price of Far East Asian HRC to the U.S. is $586 per ton. Therefore, U.S.-produced HRC is theoretically $86 per ton cheaper than imported Far East Asian HRC; the spread was $74 last week and $61 two weeks ago. Domestic prices have held this price advantage for 16 consecutive months.

The graph below compares all four price indices 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.

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