Foreign vs. Domestic HRC Prices: Spreads Continue to Narrow

The appeal of foreign hot rolled coil (HRC) over domestic steel is slowly diminishing, according to SMU’s latest foreign versus domestic HRC price comparison. Between mid-April and late May, foreign steel prices generally declined at a faster rate than domestic prices, resulting in greater potential discounts on imported products. Now, domestic prices are declining at a faster rate than foreign prices, slowly closing the pricing gap. After taking freight costs, trader margins and tariffs into consideration, select foreign prices now hold only a 6-13% discount compared to domestic prices (down from 12-26% in late May).

The following calculation is used by Steel Market Update to identify the theoretical spread between foreign HRC prices (delivered to US ports) and domestic HRC prices (FOB domestic mills). This is only a “theoretical” calculation because freight costs, trader margins, and other costs can fluctuate, ultimately influencing the true market spread. This compares the SMU US HRC weekly index to the CRU HRC weekly indices for Germany, Italy and Far East Asian ports.