When buying steel coil internationally, the quoted price is meaningless unless you understand the trade term attached to it.
A supplier may quote:
$1,750 per tonne EXW
$1,820 per tonne FOB
$1,890 per tonne CIF
$2,050 per tonne DDP
Which one is cheaper?
That depends on who pays for:
Inland transport
Port handling
Export clearance
Ocean freight
Insurance
Import duty
Final delivery
These responsibilities are defined by Incoterms (International Commercial Terms).
If you misunderstand Incoterms, you risk:
Unexpected freight cost
Double payment of charges
Customs delays
Insurance gaps
Damaged cargo disputes
This guide explains each major term clearly for steel coil buyers.
The seller makes the goods available at their factory or warehouse.
The buyer is responsible for:
Loading
Inland transport
Export clearance
Port charges
Ocean freight
Insurance
Import duty
Final delivery
Risk transfers at seller’s premises.
Domestic purchases
Experienced importers
Buyers with freight contracts
Buyers consolidating multiple suppliers
Buyer must handle export paperwork
Buyer carries all transport risk from day one
Unexpected port charges possible
EXW offers lowest unit price — but highest buyer responsibility.
Seller is responsible for:
Inland transport to port
Export clearance
Loading onto vessel
Risk transfers once goods are on board ship.
Buyer pays:
Ocean freight
Insurance
Destination port charges
Import duty
Inland delivery
FOB allows buyer to:
Control shipping line selection
Compare freight rates
Manage insurance directly
Most international steel contracts use FOB pricing.
Seller pays for:
Inland transport
Export clearance
Ocean freight
Basic insurance
Risk still transfers at port of shipment — not destination.
Buyer pays:
Destination port charges
Import duty
Inland transport
Even though seller pays freight, risk transfers when cargo is loaded onto vessel.
If damage occurs at sea:
Buyer must claim insurance.
Many buyers misunderstand this.
Seller handles everything:
Inland transport
Export clearance
Ocean freight
Insurance
Import clearance
Duties & taxes
Final delivery to buyer site
Risk transfers when goods arrive at buyer location.
Buyer simply receives shipment.
No customs complexity
No freight negotiation
Predictable landed cost
Ideal for first-time importers
Higher headline price
Less transparency in cost breakdown
Seller controls freight choice
DDP trades convenience for price transparency.
| Term | Seller Pays | Buyer Pays | Risk Transfers |
|---|---|---|---|
| EXW | Nothing beyond factory | Everything | At seller premises |
| FOB | To port & vessel loading | Freight onward | On vessel |
| CIF | Freight + insurance | Import onward | On vessel |
| DDP | Everything | Nothing | At delivery site |
Understanding risk transfer is critical.
Steel coil is:
Heavy
High-value
Sensitive to moisture
Subject to port damage
Improper understanding of trade term may lead to:
Rust claims
Handling damage disputes
Insurance rejection
Clear documentation is essential.
Ocean freight rates fluctuate.
Under:
FOB → Buyer exposed to freight volatility.
CIF → Seller exposed (but may build buffer into price).
DDP → Seller carries all volatility risk.
Market timing affects which term is best.
Under FOB:
Buyer must arrange insurance.
Under CIF:
Seller provides minimum insurance.
Minimum coverage may not cover full loss.
Buyers may want to upgrade insurance independently.
Steel cargo damage can be costly.
Under:
EXW / FOB / CIF → Buyer pays import duties.
Under DDP → Seller pays duties.
However:
Seller must understand local customs rules.
Incorrect duty calculation can cause delays.
Payment terms combined with Incoterms affect risk exposure.
For example:
FOB + advance payment = buyer risk high.
DDP + partial payment on arrival = seller risk high.
Structure payment terms carefully.
You control logistics
You consolidate shipments
You want lowest base price
You want freight control
You are experienced importer
You want simple freight handling
You trust supplier’s shipping network
You want simplicity
You are new to importing
You want predictable landed cost
Comparing EXW price to CIF price directly
Not understanding risk transfer point
Assuming CIF means risk at destination
Not arranging proper insurance under FOB
Ignoring destination port charges
Not checking who pays unloading
Trade term misunderstanding causes most import disputes.
Supplier A:
$1,750 per tonne EXW
Supplier B:
$1,820 per tonne FOB
Supplier C:
$1,900 per tonne CIF
Freight from EXW location:
$140 per tonne
Now compare:
EXW: $1,750 + $140 = $1,890
FOB: $1,820 + $80 freight = $1,900
CIF: $1,900
Now real prices are similar.
Without adding freight, EXW looked cheapest.
Depends on freight and duty.
Yes, basic coverage.
No — at shipment port.
Yes, but often more expensive.
If experienced, yes.
Yes.
Yes, especially domestic.
Buyer.
Buyer.
Yes.
Incoterms define:
Cost
Responsibility
Risk
EXW gives lowest base price but highest buyer responsibility.
FOB balances control and cost.
CIF simplifies freight but not risk.
DDP provides simplicity at higher headline price.
Professional coil buyers compare total landed cost — not just mill price.
Understanding Incoterms protects your margin and your shipment.
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