EU's 'other-country' HRC quota causes stir, Asia benefits
The EU’s “other country” safeguard quota for hot rolled coil is causing quite a stir lately. It has been exhausted in the second quarter again within days, drawing the ire of the EU’s close ally, Switzerland. In 2023, imports of this product category increased substantially from Asia, Kallanish notes.
The Q2 allocation of 923,594 tonnes, which only opened on 1 April, has already been filled, with 11t still awaiting allocation as of 4 April, according to EU TARIC system data. In Q1, that same-tonnage “other country” quota was also exhausted by 3 January, while the 933,743t limit in Q4 2023 was fulfilled on 1 October.
The main origins represented in the “other country” category are Japan, Vietnam, Taiwan, Egypt and Brazil. In 2023, all of these countries bar Brazil increased their hot rolled flat products shipments to the EU.
Imports of HS code heading 7208 products – which also include plate, which is classified separately from HRC in the EU’s safeguard quota category system – rose by 13% on-year from Japan to 1.32 million tonnes. Supply from Vietnam soared 181% to 1.13mt and intake from Taiwan grew 24% to 1.05mt, according to Eurostat data.
Although imports from Brazil halved to just over 200,000t, intake from Egypt jumped 41% to 749,665t.
The EU’s overall imports of 7208 products rose 10% in 2023 to 10.3mt.
Swiss mill Stahl Gerlafingen has lambasted the EU’s definition of its Category 1 safeguard quota – which covers HRC – for including wide flat steel, sometimes referred to as universal flats. This impacts the merchant bar produced by the mill and means it cannot clear product through EU Customs quickly enough, before the quota is exhausted by major overseas suppliers (see separate story). As a result, the firm is closing its merchant bar mill.
The Swiss government wrote to the EU Commission in February reiterating its request to terminate EU safeguard measures on steel by 30 June. “The measures are restricting traditional trade flows between Switzerland and the EU with the situation having continued to aggravate since summer 2023,” wrote the Mission of Switzerland to the European Union.
“Specifically, the residual tariff-rate quota (TRQ) for product category 1 – Non Alloy and Other Alloy Hot Rolled Sheets and Strips – was exhausted on the very first day in the previous … as well as the current [March-2024] quarter … Faced with a safeguard duty of 25%, a heavy financial burden that neither Swiss exporters nor their EU customers can bear, Swiss exporters have not been able to supply their EU customers. According to information from the Swiss industry, the situation is unlikely to improve over the coming months,” the letter continues.
In case the measure is prolonged, there should be a modification in the allocation and management of tariff-rate quotas to avoid crowding out traditional trade flows between the EU and Switzerland, the Mission adds.
There has been some talk of large Indian HRC tonnages arriving in Europe soon, which could also exhaust that country’s specific quota. Europe has emerged as a crucial market for Indian suppliers in recent years. However, as of 4 April, there were still 229,716t remaining of India’s 294,662t Q2 HRC quota, with 1,704t awaiting allocation. More material is nevertheless en route.
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Anonymous
Very good overview of the weekly steel market.
Anonymous