International Steel Prices

Foreign vs. U.S. HRC Prices: It's Now Cheaper to Order Domestic

March 3, 2022

Last year when hot rolled coil prices in the U.S. surged to record highs, foreign steel was hundreds of dollars cheaper, and import orders skyrocketed. Now that U.S. steel prices have come back to earth, foreign steel has lost that competitive advantage. Foreign HRC prices are now approximately $45-108 per ton more expensive than domestic steel, after taking freight costs, trader margins and tariffs into consideration, according to SMU’s latest foreign versus domestic hot rolled steel price comparison.

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 margins, and other costs can fluctuate, ultimately influencing the true market spread. This compares the SMU U.S. hot rolled weekly index to CRU hot rolled weekly indices for Germany, Italy and Far East Asian ports.

In consideration of freight costs, handling, trader margin, etc., we add $90 per ton to all foreign prices to provide an approximate “CIF U.S. ports price” that can be compared against the SMU U.S. hot rolled price. Recent spot checks show freight on SE Asian imports into Houston costing between $100-110 per ton and costs on European products between $85-90 per ton. Buyers should use our $90 rate as a benchmark and adjust up or down to their own shipping and handling costs if necessary.

Note that effective Jan. 1, 2022, the traditional Section 232 tariff no longer applies to most imports from the European Union, it has been replaced by a tariff rate quota (TRQ). Therefore, the German and Italian price comparisons in this analysis no longer include a 25% tariff, and comparisons to prior prices may be skewed. SMU still includes the 25% S232 tariff on foreign prices from other countries. We do not include any antidumping (AD) or countervailing duties (CVD) in this analysis.

Far East Asian HRC (East and Southeast Ports)

As of Wednesday, March 2, the CRU Far East Asian HRC price was up $13 week over week to $780 per net ton ($860 per metric ton), up $91 from one month prior. Adding a 25% tariff and $90 in estimated import costs, the delivered price of Far East Asian HRC to the U.S. is $1,065 per ton. The latest SMU hot rolled price average is $1,000 per ton, down $20 from one week ago, and down $235 from one month prior. Therefore, U.S.-produced HRC theoretically is now $65 per ton cheaper than imported Far East Asian HRC, up from $28 last week. This is the second consecutive week domestic steel prices have held this price advantage. One month ago, the case was reversed, as Far East Asian prices were $283 per ton cheaper than domestic steel.

Italian HRC

CRU published Italian HRC prices at $955 per net ton ($1,053 per metric ton), up $27 from last week, and up $92 from one month ago. After adding import costs, the delivered price of Italian HRC is approximately $1,045 per ton. Accordingly, domestic HRC is now theoretically $45 per ton cheaper than imported Italian HRC, compared to one week prior when foreign prices had a $2 advantage. One month ago imported Italian HRC offered a theoretical savings of $282 per ton. Prior to removal of the 25% tariff, the early-November spread of $577 per ton was the largest seen in SMU’s limited data history.

German HRC

The latest CRU German HRC price is $1,018 per net ton ($1,122 per metric ton), up $38 from last week, and up $50 from one month ago. After adding import costs, the delivered price of German HRC is approximately $1,108 per ton. Accordingly, domestic HRC is theoretically $108 per ton cheaper than imported German HRC, up from $50 last week. This is the second consecutive week domestic steel prices have held this price advantage. One month ago, German prices were $177 per ton cheaper than domestic steel. Prior to removal of the 25% tariff, the mid-October spread of $504 per ton was the largest seen in SMU’s limited data history.

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 importing costs (and tariffs in some cases) 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.

By Brett Linton, Brett@SteelMarkeUpdate.com

Brett Linton

Brett Linton is a senior analyst for Steel Market Update, where he began his career. Linton has been in the steel industry since 2010. He has held roles as a category manager and strategic insights director at Reibus before returning to SMU in 2024. He is a graduate of The University of North Georgia with a degree in Finance and Accounting. Brett can be reached at brett@steelmarketupdate.com or 724-314-0179.