Foreign vs. Domestic Prices: HRC Imports More Attractive Again

The latest spread between foreign and domestic steel prices shows an increasing attraction for foreign imports, according to our most recent foreign versus domestic hot rolled steel price comparison. The price differentials (after taking freight costs, trader margins and tariffs into consideration) between domestic HRC and foreign imports had surged from February to March of this year, reaching record highs in favor of foreign producers. The German and Italian HRC price spreads then shrunk through April and May, while Far East Asian HRC continued to hold a strong advantage over domestic prices. Over the past month, the price spreads for all three regions have begun to rise again in favor of foreign producers, especially Far East Asian HRC.

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.