News of changes to the European Union’s steel safeguard measures first appeared at the end of May and the European Commission confirmed the new measures a month later.
For the HRC market, the major change was to residual HRC quota access, adding a 15% cap per country over the total residual quota volumes introduced.
Market participants said they expected the changes to limit imports of HRC to the EU. Notably, a market source told Fastmarkets they expected Europe to see a reduction in import volumes of around 1.0-1.5 million tonnes under the “other countries category.”
Vietnam, Japan, Taiwan and Egypt have previously been the principal suppliers of HRC to the EU under the “other countries” category, with Asian suppliers offering the most competitive prices, according to market participants in Europe.
Shortly after the announcement of the 15% cap on residual HRC quotas, some European steelmakers even made attempts to increase domestic prices in June, as Fastmarkets reported at the time.
Those attempts were largely unsuccessful, however, due to the lack of demand from key steel-using sectors, leaving domestic prices for HRC in Europe broadly flat for more than a month.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €628.75 ($674.79) per tonne on Wednesday, stable day on day.
The index was down by €0.63 per tonne week on week and by €4.58 per tonne month on month.
Industry sources now expect European producers to move to increase offers for September, in anticipation that a shortage of cheaper imports will support the rebound.
Yet market sources told Fastmarkets that this could be countered by low end-user demand that has continued to be the main driver of price direction.
Besides, the European market is still oversupplied meaning even a loss of 1-1.5 million tonnes of imports might not be enough to balance the markets.
So far, there was still no shortage of import material – on the contrary, stocks in ports were full with imported coil, and according to different estimations, it might take up to nine months to clear the stock of coil ordered before safeguard review went into effect.
Actual quota use
EU customs data as of July 3 shows that some countries have already significantly exceeded their allocation for the third quarter of 2024, and some suppliers used over half of the allocation just a few days after the new period began.
For tonnages that exceed the quota allowance, either the safeguard duty will need to be paid, or buyers can only custom clear tonnages that meet the quota and store the rest in the port. The second option would incur substantial storage costs, sources said.
Published by: Julia Bolotova
