With more than seven weeks to go before the expiration of the European steel safeguards, domestic markets are more divided than ever, particularly regarding wire rod, for which only 4% of the quota remains.
The allocated cleared balance for rod has not increased since December 7, however the rod backlog balance pending clearance increased with 42,401 mt remaining under the quota out of roughly 1.06 million mt initially. The quota was set as an average of the last three years of import volume.
Eunirpa, the European association of rod processors, is calling for an increase in the actual quota to what they are calling “a realistic value of the 2018 imports” in combination with a global trade arrangement. Meanwhile, EU producers said there is enough domestic rod production and the safeguards were just a way to level the playing field.
“We estimate the total import in 2018 at around 2.6 million tons. With the absence of China [AD procedure in place since 2008] the offerings of wire rod from outside the EU are still very limited coming from a small number of interested countries,” Kris Van Ginderdeuren, president of Eunirpa, told S&P Global Platts.
“We can also conclude that there is absolutely no redirection of volumes previously imported into the US towards the EU. Countries like Mexico, Japan, Canada or Brazil did not show any interest to export to Europe.
“It is unacceptable to Eunirpa if the EU will make life difficult for the entire population of EU fabricators. It will simply kill their business while giving integrated companies an extra opportunity for further concentration, which is bad for the EU market after all.”
The Eunirpa chief said the EU has already seen rapidly growing imports of rod end products such as galvanized wire, welded fence wire and wire rope.
However, some major EU rod producers have said there is an issue of oversupply in Europe, including a producer in Greece who said demand there has fallen dramatically because of the economic situation. “We have two plants in Athens and Vollos, but we stopped production at the Athens plant in 2012 with a 400,000 mt/year capacity because of lack of demand,” the producer stated. “The statement that there is a shortage in Europe is false. There is wire rod available but not at the cheap import price levels.”
According to Eurofer, in the EU 28 last year 21.2 million mt of wire rod were produced. In 2016 the total was about 20.5 million mt and 10 years ago rod production totaled about 22.9 million mt. Last year European rod imports from third countries totaled around 2 million mt, double the 2013 total.
The safeguards were put in place in July to avoid the re-direction of steel import flows as a result of the 25% US Section 232 tariff. Market chatter lately suggests the official decision on the fate of the EU quota system will not come until after the Christmas holidays.
Eunirpa was founded in 2016 to give a voice to large rod transformer issues, particularly after large independent rod producers went bankrupt and moved downstream, transforming their own internal rod production.
Annalisa Villa, Erica Sesay and Len Griffin