The European Commission’s safeguard measure review has not met the expectations of the EU’s stainless steel mills or processors.
Sources were reacting to a European Commission document leaked on Tuesday, which was then confirmed in a WTO notification on Wednesday.
The proposed amendments to EU safeguards include new caps for carbon steel, but there appears to be no indication of additional import restrictions for stainless steel coils and long products.
A stainless steel bar manufacturer voiced their apprehension about the insufficient protective measures against lower-priced products from Asia, especially from India. Eurofer is reportedly gearing up to address the proposals. The Commission is holding a consultation period on 11-18 March.
The outlook for future European price increases for stainless bar appears uncertain. A continued material influx from other countries into Europe is likely to reduce domestic sales and maintain compressed margins in the market.
The safeguard quotas for stainless coil and other flat products remain unchanged, with the existing quotas still in effect. A prominent steel processor and a steel producer, who communicated with Kallanish shortly before the document was leaked, had expressed optimism that the announcement would catalyse an increase in flats prices.
The current concern, however, is that the increase attempts in Europe may not gain sufficient traction, leading customers to persist with purchasing lower-cost material from Asia. According to two sources, stainless sheet prices in Europe continue to be comparatively low when assessed against the cost of cold rolled coil feedstock. Sheet is at approximately €2,600/tonne ($2,840) ex-works, while European CRC at €2,500/t for May delivery indicates a constrained environment for margins and profitability.
“I believe the Commission has now expressed a firm political will on import restrictions. The EU must want to preserve the relationship with Asian countries, particularly when the rapport with the US has become tricky. Regarding stainless, the [leaked] document represents 40 pages of nothing. This will strongly impact the sector that has suffered months of unsustainable margins. This represents a significant setback for producers but also for the downstream, as it is unlikely that coils derivatives will increase,” a coil buyer comments.
Import restrictions will continue to apply to nations such as China and Taiwan; however, there has been no implementation of a cap. This quarter, multiple buyers have acquired CRC from various Asian sources, notably Korea.
The Commission has proposed that carbon steel products that have experienced severe import surges receive additional restrictions such as new quota caps and revising the administration of unused quotas. Adjustments also include reducing liberalisation rates from 1% to 0.1%, to slow tariff-rate quota (TRQ) expansion and ensure a better balance with market demand.
Natalia Capra France
