The EU’s proposed safeguard duty revision could encourage mills to go for a synchronised price hike. This comes after weeks of hot rolled coil moving down close to the €600/tonne ($650) mark and repeated mill hike attempts proving to be unsustainable, Kallanish notes.
The revision means the “other countries of origin”, which previously had a collective quarterly HRC quota of around 1 million tonnes, will now face an additional restriction per individual country. Individual countries may not sell more than 15% of the total, meaning 150,000t. Some of the more active exporters “easily sold twice that,” a German observer says.
The measure was proposed by the European Commission’s EG Trade at the end of May, and will have to be approved by each EU member state this coming week. In addition, it needs to be approved by the WTO, which many see as a given. But there is uncertainty over whether the rule will take effect as of 1 July or 1 October. “That may remain unclear until the end of June,” a Dutch manager says. “Mills are well-advised to try for hikes now for orders throughout June, because it might turn out that the market gets another break until October,” he adds.
The German observer does not think that the different dates will matter. “Even if it takes until October, people are now already deterred from ordering from Taiwan, Japan or Vietnam because the ships won’t come before October, with the risk of a 25% duty,” he notes.
He expects the market leader mill to make the first move, with most integrated mills following. This might not include the one group that re-rolls Russian slab, which has been heard undercutting market prices to retain orders.
Some German buyers expressed doubt that a big hike can be asserted. “The new rules will not change the import business all that much, and you cannot just create the demand to make increases sustainable,” one says.
Christian Koehl Germany