Foreign vs. Domestic HRC Price Analysis: Foreign Appeal Fading

Foreign hot-rolled steel imports have all but lost their appeal this week and are now at levels comparable to domestic steel prices, according to Steel Market Update’s latest analysis. Since mid May, US steel prices have generally declined at a faster rate than foreign prices, meaning the potential discount on imported products has been shrinking for the past two months. After taking freight costs, trader margins and tariffs into consideration, foreign imports for one region are now more expensive than domestic steel, and the other two regions hold a 7–8% potential discount over domestic prices (down from discounts of 12–26% seen in May).

The following calculation is used by SMU to identify the theoretical spread between foreign hot-rolled coil (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.