Two German coil processor interest groups have expressed their concern over efforts by the European Commission (EC) to reduce the quarterly import quotas.
In a letter in mid-May, the Commission had announced that it will review the current quotas to see if they adequately reflect the market situation. Although the EC did not explicitly say so, its move appears to follow pressure by steelmakers to limit the tonnage quotas, which were planned to be raised gradually each quarter.
The natural opponents to this are coil processors such as the German sheet formers represented by federation IBU (Industrieverband Blechumformung) and the independent cold-rollers, represented by FVK (Fachverband Kaltwalzwerke). In a joint letter, the associations are asking the EU to expand the quotas for steel categories 1 (hot-rolled coil) and 4B (hot-dip galvanized coil). “… Or at least keep them as they are,” explains Andreas Schneider of Stahlmarkt Consult on behalf of the two associations.
The concern is mainly about deliveries from China and South Korea, which were depleted all too quickly in the first shortened quarter of the quotas (February and March). While mills argue that imports have still been excessive in 2018/19 despite duties, the processors cite various reasons why this was so.
“For one thing, there has been a building-up of inventories late last year, to prepare for the shortage from the looming duties,” Schneider explains to Kallanish. There was a shortage of galvanized product in 2017 and 2018, which created a need for imports from China and South Korea. Now, the trading relationships newly-established during that period are at stake.
Essentially, the associations are criticising the EU for launching a review after the duties have been in effect only for several months. “It is totally inadequate to assess a situation after such a short time – you would need a full year to be able to do this,” he says.