World vs Domestic Prices
The following calculation is used by Steel Market Update in order to identify the spread between world hot rolled export prices as determined by SteelBenchmarker and domestic (USA) hot rolled prices. SMU uses the world hot rolled export price plus costs added for freight, handling, trader margin, etc. The number generated is then compared to the spot (FOB Mill) domestic hot rolled price using the SMU Hot Rolled Index average for the same week, with the difference being the spread between domestic and world hot rolled coil pricing.
SMU uses a minimum of $70 to as much as $100 per ton for freight, handling, and trader costs, which is then added to the export price in order to get the steel to ports in the United States. This additional cost more closely mirrors the "true" world HR export price paid for hot rolled steel CIF USA Port.
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