US Has 99 Problems, But Hot-Rolled Coil Imports Ain’t 1

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Cheap steel imports were one of the biggest problems that U.S. steelmakers faced this year.

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However, especially for some steel products like hot-rolled coil (HRC), imports really aren’t a problem anymore. Why is this? It’s not because the already stiff anti-dumping/countervaling duties in place, nor because Donald Trump will take more aggressive action against steel imports. It’s simply because imports are not attractive to steel buyers anymore.

US steel imports fall in October. Source: US Census Bureau

U.S. steel imports fall in October. Source: US Census Bureau.

In October, The U.S. imported 2.4 million metric tons of steel, down 11% from the same period last year. Steel imports fell on a monthly basis for three consecutive months after they hit a one-year high in July.

Hot Rolled Coil prices in US vs China. Source: MetalMiner Index

Hot-rolled coil prices in the U.S. (blue) vs China (purple) Source: MetalMiner IndX.

The price spread between China and U.S. hot-rolled coil has come down to less than $30 per ton. Prices in China set the floor for international prices. As the spread between U.S. and international steel prices narrowed so much in some steel product categories, like HRC, that there isn’t much incentive for domestic steel buyers to look for import offers. According to preliminary data released by the U.S. Census Bureau, HRC imports fell by 37% in October from a year earlier.

Cold Rolled Imports Still Hold

The international price spread for cold-rolled products has also come down significantly, but the gap is still enough to justify importing some material.

Cold rolled coild prices in US vs China. Source: MetalMiner Index

Cold-rolled coil prices in the U.S. vs China prices. Source: MetalMiner IndX.

In October, CRC imports rose 33% compared to last year, with a substantial increase in imports coming from Vietnam. Some steel producers in the U.S. recently filed a trade case alleging that CRC is being transshipped.

What This Mean For Metal Buyers

Fewer imports provide more pricing power to domestic steel producers in an otherwise well-supplied industry.

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As long as international steel prices continue to climb, domestic mills will have it easy and be able to justify any price hike, particularly in the case of HRC, as imports at these levels are not attractive anymore.

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