The European Commission’s steel import quotas on coated sheets will not
be sufficient for European stockholders and service centers to meet
demand and could cause shortages, particularly for non-automotive
industries, as the car industry is likely to absorb most of the quotas,
Brian Paterson, chairman of the International Steel Trade Organization
(ISTA) told S&P Global Platts.
The EC set new safeguard
quotas for steel effective February 2, with changes seen from the
initial proposal in December 2018, particularly for coated sheets.
“The increase in the Chinese quotas, covered under Table 4b [in the
regulation] will be largely used to facilitate the automotive industry,
whereas traditional metallic coated sheets import countries, such as
India and South Korea, to the EU, will have to prioritize their export
offer to achieve best returns and will not be able to facilitate all of
the customer’s requirements,” Paterson said.
Sources suggested
that car-makers weighed in during the consultation period early this
year to increase quotas, as category 4B is primarily used for
automotive applications and 4A for construction.
South Korea
and India received both country-specific quotas in the two categories,
but whereas quotas in the construction category were decreased from
proposal to final regulation stage, volumes in automotive were
increased. Trading sources told Platts last week that they feared
quotas could be filled very soon in both categories.
According
to data from the European Commission Monday, 87,000 mt out of 204,951
mt of the total Chinese import volume for the February 2-June 30 period
in category B, were already awaiting allocation. The awaiting
allocation for the “all other countries group” in category 4B have
already reached total volumes for the period until the end of March.
“Demand from markets such as general manufacturing, construction and
industrial industries could be under pressure from supply, as these are
not traditional core markets for EU mills,” Paterson said.
The
EC should be starting import volumes allocation this week and updating
the total balance that will be available to import on a daily basis.
European steel association, Eurofer, said it would be looking into the matter.
— Laura Varriale
