EC wants more feedback on pandemic impact on steel market

The European Commission is seeking additional feedback from relevant parties about the impact of the coronavirus on the steel industry, with the information to be included in the current review of steel import quotas, according to an official document seen by S&P Global Platts Monday.

The EC clarified that this does not signify an acceleration of the review, as the quota evaluation process will maintain its schedule “in order to avoid any uncertainty and undue disruption of the steel safeguard system currently in place.

“The current review shall be concluded in the shortest time frame and, whenever possible, before 30 June 2020,” the EC announced.

The additional requests for information must be submitted by market sources by no later than May 7.

The EC acknowledged in its statement that during the written phase of the proceedings, the spread of the coronavirus in the EU was at an early stage, which meant interested parties were unable to submit any “meaningful comments and/or relevant information” on how the pandemic had impacted the “functioning of the EU” and/or worldwide steel market.

The European steel association Eurofer and the European Steel Tube Association (ESTA) have already announced their request for a 75% reduction in import quotas for the second and third quarters as added pressure from Chinese, Iranian and Russian steel exports mounts due to weakening domestic markets.

Although a reduction in import quotas is a probable outcome of the decision, the cuts are not likely to amount to the 75% reduction requested by Eurofer, sources said.

European steel plants shut most of their capacity due to lower demand and in order to meet the new safety and health criteria to help to minimize the impact of the coronavirus in the mills.

One Nordic-based buyer said that while the reduction in quotas would come as a “welcomed decision” among market participants, he did not think a 75% reduction in imports was feasible, adding that the proposed cut was “too high”.

He said, “even if the import quota is reduced, raw material [imports] will still come in [to Europe]. There will be more Asian material coming into Europe, so even though production capacity may be lower, [cheap] raw material will still arrive into Europe, pushing prices lower.”

The same source also said that recently, customers were looking for more sustainable buying opportunities, and were therefore refraining from buying import material.

“Customers are looking for more green and sustainable products these days. The transport [of imports] in itself contributes a lot to carbon emissions, so if [imports] are not attractive for them, they’re not attractive for us.”

Domestic hot-rolled coil prices have gone down by nearly Eur46/mt since the beginning of March, when the virus began spreading rapidly across Europe.

Import prices had a more drastic fall, declining by Eur102/mt since March, putting pressure on European domestic prices.

— Amanda Flint, Annalisa Villa