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EU steel safeguard changes insufficient to turn market

  • Thursday, June 9, 2022
  • Source:ferro-alloys.com

  • Keywords:EU steel safeguard, market
[Fellow]But there were other changes in the quotas, many of which have seemingly gone unnoticed.
[Ferro-Alloys.com]The European Commission's changes to its steel import safeguard measures are unlikely to be sufficient to shift sentiment and the downtrend in prices, according to market participants.
 
The EC yesterday said it will implement a number of revisions to the current measures from 1 July, which were under review since end of 2021. Most notably, hot-dipped galvanised (HDG) imports falling under the 4A product category from any origin will be subject to the quotas and 25pc duty on top of any volumes imported outside of the allocation. This move was very much expected after Vietnamese HDG imports jumped to nearly 1mn t in 2021, from only about 70,000t in 2020. In 1Q 2022, volumes from the country are at almost 350,000t.
 
But there were other changes in the quotas, many of which have seemingly gone unnoticed.
 
Perhaps the biggest difference is that the ‘other countries' quota for hot-rolled coil (HRC) has been reduced by nearly 200,000 t/quarter. For July-September 2022, it is now 900,000t, whereas in April the quota was set at 1.17mn t for the same period. Similarly the quota for April-June 2023 — the crucial last quarter of each quota year, during which all countries with their own allocated import volumes get access to a residual extra amount — has gone down to 890,500t from 1.15mn t previously. The quotas for October 2022-April 2023 have also been reduced by similar amounts, as have the ones running until end of June 2024.
 
Other changes to the measures include Egypt no longer being exempt from the quotas for HRC and HDG 4A, and is now importing under the ‘other countries' allocation. Similarly, Vietnam and Ukraine have been added to the list of countries for which the quotas apply. China and Vietnam are no longer subject to the measures for cold-rolled coils (CRC). But there are duties on Chinese CRC, which should keep imports at bay.
 
But market participants expressed almost the same sentiment today, saying the changes were not enough to strengthen market dynamics, especially at a time when demand is very sluggish, with some estimating end-user consumption from certain sectors in Europe to be down by 30pc. Some pointed towards the underutilisation of the latest quotas, especially for Indian HRC, as an indicator that the safeguards were not impactful in a declining market.
 
"Not much impact as nobody is looking for imports anyways," a market participant said. "When the market is back we will see the effect, mostly on the fight of 4A between Turkey and Vietnam. No impact on HRC, as Vietnam and Egypt shipments are negligible."
 
But the decrease in the HRC quota was noticed by some, saying in combination with Egypt's addition to the list of non-exempt countries meant the effective volumes available to importers are even lower. Some said the reduced HRC ‘other countries' quotas would make a difference, mostly in the last quarter of each quota year, as this is when countries like India, which have previously exhausted their allocation early in the quarters, would not get access to extra volumes. argusmedia
  • [Editor:kangmingfei]

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