Steel spreads analysis: US-China HRC price difference hits historic high
The price difference between US Midwest hot-rolled coil and China domestic HRC has reached its highest level since S&P Global Platts started assessing these prices in 2008. The shortage of available spot material in the US saw the HRC price jump $32.50/st day on day to reach $1,299/st March 12, up almost 200% since last August.
In Shanghai, the spot price of Q235 5.5 mm HRC on that day was Yuan 4,950/mt ($761/mt). Planned production cuts in the northeastern city of Tangshan are likely to support prices further, while overall sentiment remains buoyant.
In the US, would-be buyers are now looking at June before they are able to source coil, therefore US prices will continue climbing. Given the high prices on offer, the US market is proving to be attractive to sellers from Japan and South Korea. US steel import license data shows that in February, South Korea was expected to export 196,000 mt of steel to the US, up 64% from January. Japan's exports rose 85% month on month to 82,793 mt. Total HRC imports into the US rose 15% on month to 138,460 mt in February, according to US Department of Commerce data. Japan and South Korea have been lifting their exports to the US and Europe but have not been particularly active in Asian import markets. Chinese mills and traders have not been in a hurry to export given the high domestic prices on offer.
