EU steel market tries to estimate 1 Oct import arrivals

EU market participants are trying to estimate import arrivals for the upcoming ‘other countries’ import quota, resetting on 1 October, but this is proving a difficult task, with estimates ranging from 600,000t to 1.2mn t.

Sources are also speculating on 1 January arrivals, as some buyers have and are still concluding purchases for December arrival to guarantee clearance on the first day of next year. But a number of Asian suppliers, which import under the ‘other countries’ allocation, are already offering for delivery beyond the expected beginning-of-January exhaustion date.

The quota uncertainty appears to be lending some support to index-linked trade, as some buyers look to secure tonnages for next year, with arrivals before subsequent new quotas reset, without risking agreeing on the price today.

Looking at export customs data for Japan, Taiwan, Vietnam and Egypt — some of the largest suppliers to the EU under the ‘other countries’ quota — October arrivals could be more than 1mn t, although it is unlikely that all of this material will arrive and be put forward to customs by 1 October.

Japan exported about 185,000t of hot-rolled coil (HRC) to the EU in June and 83,000t in July, the latest month for which data are available. The average volume for this year so far is 118,000 t/month. In comparison, Taiwan has exported an average of 123,000 t/month of HRC to the EU this year so far, with the last data available in June at 157,000t. Vietnam, which supplied June figures last and showed no exports to the EU for that month, has exported an average of 70,000 t/month this year. Egypt has exported an average rate of 75,000 t/month to the EU.

Assuming an average transit time of two months from the Asian suppliers, taking the average 2023 monthly figure for the unavailable export data for the four countries mentioned above, and assuming there was a steady flow of goods, arrivals should be 1.0mn-1.1mn t in October from those four suppliers alone. The previous quota, for July-September, exhausted on 25 July, and there could be some material at port that could not clear in the July-September quota. The October-December quota is 933,743t, the same level as the previous quarter.

Some EU buyers have said they intend to wait until the first week of October to make significant purchasing decisions in order to evaluate what supply in the bloc will be like. It is likely that decisions on potential output reductions at EU mills will be influenced by the quotas’ utilisation, in light of the weakened market demand and rising production costs.