The new safeguard measures coming into effect in February will mean plenty of extra bureaucratic work for steel buyers, but no “… worst case scenario” for supply and prices, a German consultant finds. The measures to be imposed by the European Commission (EC) are generally unpopular in both the trader and end-user communities.
The new set of measures is a complicated group of rules which will unnecessarily tie-up resources and create difficulty along the supply chain, says Andreas Schneider of Stahlmarkt-Consult. “I have talked to many steel buyers, and some are massively annoyed,” he tells Kallanish. “They will be brooding over which rule applies to import X from country Y, and which duty-free quota will be exhausted at a given point in time,” he says. This clearly goes against the idea of being flexible in taking advantage of upcoming opportunities, as should be normal in a market economy, he says.
In spite of this, steel consumers have had some success with interventions in Brussels, so that the EC could not ignore their interests completely. One success is the gradual increase in duty-free quotas by 5% each year – a detail that has been much derided by Germany’s steelmaking industry.
Schneider also believes that the effect of the measures on the actual global market trends will be limited, as has been the case during the trial period since July. Apart from some products such as wire rod and galvanized coil, a scenario of overall supply bottlenecks with massive price increases remains unlikely. Some upward movement in prices may occur, but the softening of prices seen in general during recent months is likely to continue, he predicts.
