Cheap Chinese Steel Signals More U.S. Imports: Chart of the Day

Surging production of steel in China means metal from the country has been trading at a discount to U.S. prices for the longest stretch since at least 2006.

The CHART OF THE DAY shows Chinese hot-rolled coil, a benchmark steel used in cars, trucks and appliances, has been lower than the price of U.S. metal since May. Cheaper overseas supplies signal that American steel imports will rise 3.4 percent this year after a 2 percent gain in 2013, according to Nomura Holdings Inc.

“Spreads between U.S. and overseas steel have gotten to the point where even customers who don’t normally import steel just can’t say no,” said Spencer Johnson, a risk manager at INTL FCStone in New York. “The discount just got huge.”

Chinese output of steel products rose 11 percent in December from a year earlier and was 85 percent higher than at the end of 2008, government data show. Prices for hot-rolled coil in the nation slid 4.5 percent last year, the third straight decline, according to Metal Bulletin.

By contrast, U.S. prices jumped 6.6 percent as economic growth accelerated and stockpiles declined, Steel Business Briefing data show.

To contact the reporter on this story: Joe Richter in New York at jrichter1@bloomberg.net

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

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