French stainless steel producer Aperam expects unrevised third-country EU import quotas for stainless hot rolled flat products to yield increasing import pressure in the second half of 2020.
The European Commission decided to make country quotas quarterly to straighten out import flows and prevent a repeat of the H2 2019 import surge. However, Aperam believes the Commission needs to align quotas with the Covid-19-induced demand drop in Europe.
“Current quotas are extremely generous and allow third countries to solve their problem of oversupply by dumping material into the European Union, thereby hurting domestic employment and crowding out environmentally friendly produced material,” Aperam says in a report seen by Kallanish.
Although imports maintained a disproportionate market share of close to 30% in 2019, they dropped off significantly during H1 2020. This is a direct consequence of the excessive imports during H2 2019, when several countries misused their annual quotas, which run from July to June of the following year. These countries shipped as much material as quickly as possible to Europe, consequently exhausting quotas in Q2 2020 and thereby limiting imports, Aperam observes.
The European Commission confirmed earlier this year that preliminary duties on hot rolled stainless steel flat products from China, Indonesia and Taiwan should be imposed as of 12 April (see Kallanish passim). This decision curbed imports of these products during Q2.
As a consequence, the market share of imports dropped from 27% in H1 2019 to 23% in H1 2020. A pending countervailing duties case against China and Indonesia is expected to be concluded in 2020, Aperam adds.
The company started well into 2020. The first quarter saw a seasonal volume recovery and the exhaustion of some import quotas increasing demand for domestically-produced material. However, towards the end of Q1 the company started to face significant Covid-19-related effects which continued over Q2.
H1 Ebitda was €119m ($139.6m) versus €176m in H1 2019. Total sales in H1 stood at €1,867m compared to €2,268m in H1 2019 (see Kallanish passim).