Extreme protectionism to cause shortage if demand resumes: Assofermet

Potential EU anti-dumping duties on hot rolled coil from Japan, Vietnam, Egypt and India could result in a material shortage on the domestic market, according to a market note by Italian steel trade association Assofermet. 

Paolo Sangoi, president of Assofermet’s distribution segment, warns that the competitiveness of Italian buyers and service centres is being impacted by the compromised opportunity to import coils from third countries, Kallanish notes.

Currently, the market is experiencing a period of stagnant consumption and low coil prices, with the distribution sector being the weakest element of the value chain due to low margins and profits.

Nevertheless, Sangoi contends that a material shortage may occur, potentially resembling the events of 2021 and 2022, if demand increases and consumption improves.

In the event of a resumption of consumption and the absence of imports, the shortage that has been observed in the past may resurface, resulting in significant challenges for buyers. Currently, EU steelmakers are reported to be open to negotiation.

The EU’s 15% import cap has already eliminated 1.6 million tonnes from the market for European buyers, Sangoi says.

Japan, Vietnam and Egypt have already been hit by the imposition of the 15% quota cap under the current EU safeguard measure without the need of further AD measures.

“The higher cost that importers will be forced to bear will inevitably be passed on to end customers, producers of components and finished steel products, undermining their already precarious level of competitiveness in international markets,” it says.

The consumption resumption is not anticipated to occur this year; however, the situation may begin to recover in the first quarter of 2025.

The price trend must change direction, as both producers and coil buyers have a genuine need for price increases throughout the entire value chain.

Nevertheless, this is impossible without a commitment to reduce output, according to Sangoi.

The EU initiated an anti-dumping investigation on imports of hot-rolled flat steel from Egypt, India, Japan, and Vietnam, according to the Official Journal of the European Union on 8 August.

The complaint was lodged on 24 June by the European Steel Association Eurofer.

The products under investigation include certain flat-rolled products of iron, non-alloy steel, or other alloy steel, including cut-to-length and narrow strip products, not beyond hot-rolled, clad, plated, or coated (see Kallanish 9 August).

The Chinese economic crisis has further exacerbated the lacklustre demand for service centres.

“Italy’s GDP remains positive; however, Germany’s stagnation is exceedingly concerning. The path of reducing the cost of money, which has been announced, does offer some optimism for the medium term, as it could potentially stimulate demand.”

According to Assofermet, the sales volume contraction in July was less severe than anticipated, with cold-rolled and coated products outperforming hot-rolled products.

However, August was adversely affected by the prolonged production shutdowns, which resulted in a decline in prices and the market was extremely weak in September with no real resumption after the summer break.

Natalia Capra France

kallanish.com