EU auto industry likely to absorb coated sheet quotas: ISTA

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