Italian HRC buyers clear customs, fear high duties
The hot rolled coil market in Italy is currently facing notable stagnation, characterised by low order volumes and subdued consumption from end-users and coil service centres, industry sources tell Kallanish.
As of 1 October, the majority of HRC import buyers successfully cleared through customs the stocks they had in consignment at ports, coinciding with the renewal of EU import quotas.
It is anticipated that Italian buyers will incur an average duty of approximately 10%, or potentially slightly less, contingent upon the material’s origin. The duty rates for HRC stand at 4.2% from Egypt, 7.5% from Taiwan, 12.5% from Japan and 10.5% from Vietnam.
Contracts that were implemented in March and April at HRC pricing more than €100/tonne ($110.3) higher than current levels will be subject to duty payments. Service centres and re-roller sources indicate they will face significant financial challenges due to the duty, particularly in light of current low consumption levels and soft pricing.
A service centre doubts the recent increases implemented by ArcelorMittal will be successfully passed on downstream. “Certain customers are facing challenges in maintaining production levels throughout the week. Some have resorted to reducing their output. Additionally, the automotive industry, along with other sectors, is currently unable to absorb the existing steel production levels,” the source comments. A re-roller anticipates values may begin to rise gradually and expects customer activity to increase in October, following the sluggish purchasing observed in September.
Another service centre believes existing coil and derivative capacity is excessive. This, coupled with service centres’ high stocks, may hinder any prices hike.
Service centre quality HRC values in Italy are at approximately €530/t base ex-works but the level of €520/t has been heard in Germany. Cold rolled and hot-dipped galvanised coil are at €650-670/t base ex-works, with the low point of the range being paid for CRC.
ArcelorMittal told customers last week it is raising coil offers in Europe, with immediate effect. The steelmaker is now reported to be offering HRC at €590/t base ex-works, up some €40/t compared with offers registered last month. Other northern European producers are following suit (see Kallanish passim).
Natalia Capra France
EU frees up some Egypt HRC quota tonnage
Egypt has seen 10,175 tonnes of its EU hot rolled coil third-quarter safeguard quota made available, despite having oversubscribed its 141,850t quota cap immediately after the current period opened, Kallanish notes.
As of 2 July, Egypt had 176,626t awaiting allocation for customs clearance. Whether the correction stems from withdrawals from quota declarations or other factors was unclear at the time of publication. The European Commission has implemented a blocking period for Egypt’s quota between 11 July and 11 August. Total awaiting allocation as of 11 July was 339t.
Vietnam, Japan and Taiwan have fully utilised their Q3 caps under the “other countries” HRC quota, each shipping 141,850t.
About 357,750t is still available under the other countries quota of 945,665t for Q3.
The US, Libya, and Canada have 100% of their other countries HRC quota caps available.
India has utilised 74% of its HRC quota. Turkey and Australia have each filled 18%.
South Korea, the UK, Serbia, and Switzerland had low quota utilisation rates, ranging from 3% to 12%.
The European Commission capped the maximum volume a single country can export under the other countries TRQ to 15% per quarter to stabilise the market, it said earlier. This category’s early quota exhaustion had led to market imbalances and increased import pressure.
The Italian Customs Agency (ADM) introduced an experimental procedure for tariff quotas starting from April, allowing importers, if quotas are exhausted, to cancel or adjust their import operations without incurring additional duties.
| Origin | Quota 1.7-30.9.2024 | Imported | Balance | Awaiting allocation | Avaliable TRQ, % |
| Russia | not applicable | – | – | – | – |
| Türkiye | 475,174 | 84,143 | 391,031 | 570 | 82 |
| India | 301,704 | 222,210 | 79,494 | – | 26 |
| Korea, Republic of | 188,405 | 11,369 | 177,037 | 4,128 | 92 |
| United Kingdom | 157,608 | 4,972 | 152,636 | 1,099 | 96 |
| Serbia | 167,257 | 18,215 | 149,041 | 1,322 | 88 |
| Other countries, inc | |||||
| Egypt | 141,850 | 131,675 | 10,175 | 339 | 7 |
| Vietnam | 141,850 | 141,850 | – | – | 0 |
| Japan | 141,850 | 141,850 | – | – | 0 |
| Taiwan | 141,850 | 141,850 | – | – | 0 |
| Australia | 141,850 | 26,046 | 115,804 | – | 82 |
| Switzerland | 141,850 | 4,183 | 137,666 | 165 | 97 |
| United States | 141,850 | 461 | 141,389 | 1 | 100 |
| Libya | 141,850 | – | 141,850 | – | 100 |
| Canada | 141,850 | – | 141,850 | – | 100 |
| Total other countries | 945,665 | 587,914 | 357,750 | – | 38 |
| Total | 2,235,812 | 928,823 | 1,306,989 | – | 58 |
Source: EU TARIC, as of 11 July. Calculated by Kallanish
Elina Virchenko UAE
EC implements 15pc cap on HRC other countries quota
The European Commission is implementing a 15pc cap on any individual country selling hot-rolled coil into the quarterly other countries quota of its steel safeguard.
This effectively caps any country selling into the other countries at 141,849t/quarter for the rest of this year: the other countries quota for July-September and October-December will be 945,664t.
If no grace period is granted, sources suggest this could lead to significant duties being incurred on 1 July, as many countries will have more than 15pc of the other countries volume in transit to the EU.
The commission decided against any other individual country quotas on HRC, the notification said.
The commission has been carrying out its review of the steel safeguard for months now. Market sources had anticipated Vietnam would get its own quota, while in recent months there have been suggestions Japan actively asked for its own quota.
The liberalisation rate has also been reduced from 4pc to 1pc.
The commission also notified the WTO the safeguard would be extended for two years, meaning there will be a brief six-month overlap between the safeguard and the imposition of the financial component of the carbon border adjustment mechanism (CBAM).
“The commission also established the surge of imports from certain new origins was related to growing overcapacity in certain regions as well as to the significant pressure exerted by a strong increase in Chinese exports to certain markets,” it said in the notification. China has been exporting record volumes of HRC this year, with significant tonnage going into nearby markets, such as Vietnam.
The changes to the safeguard are subject to approval by member states, and the commission will hold consultations from 29 May until June 10 on the proposal.
European Commission investigates extending steel safeguard quotas
The European Commission initiated a review into a possible extension of safeguard quotas on steel imports into the European Union, according to a notification in the Official Journal Feb. 9.
According to the EC, 14 EU member states sent a request to extend the tariff-rate quotas to 2026.
“The request contains sufficient evidence suggesting that the safeguard measure continues to be necessary to prevent or remedy serious injury and that Union producers are adjusting,” the EC said.
As part of the extension investigation, the EC will review the allocation of tariff rate quotas, products as well as categories. The deadline for feedback is Feb. 26.
Market participants mostly welcomed the investigation Feb. 9.
“We need the safeguard extension,” an Italian flat steel service center source said. “Otherwise imports would flood the European market, and the prices would collapse. Neither mills nor distribution need the removal of safeguard.”
European market participants have been warning of the redirection of trade flows while the US is holding up its section 232 measures on imports as European producers are making costly technical changes at steel plants to decarbonize.
“The mills need the steel prices to remain higher to cover the costs of green transition, and exposure of the European market to import without safeguard would make it more challenging,” a European flat steel mill source said.
One European long steel buyer hoped for an update of specific country quotas.
In the current quota period, running from Jan. 1 to March 31, the hot-rolled coil as well as the wire rod other country quotas were exhausted swiftly after opening Jan. 3. The country-specific quota for hot-dipped galvanized coil for automotive use was also exhausted swiftly. Other steel import quotas remain open as of Feb. 9.
“The safeguard is a legitimate and indispensable tool for stabilizing the EU steel market and ensure the sustainability of the European steel industry, which is on its way to decarbonisation,” Axel Eggert, director general of the European Steel Association, or Eurofer, said Feb. 9.
“Massive, market-disruptive import surges from third countries, mostly with little or no climate ambition, further jeopardize the transition,” Eggert said.
Eurofer particularly warned of excess capacity being directed toward Europe without safeguard quotas, as particularly in Southeast Asia, the Middle East, and North Africa steel production is increasing, while China was close to record steel exports in 2023.
“Consequently, the European Union has become a primary target for trade deflection, with steel exports increasingly redirected towards its market,” Eurofer said.
The UK, which has set up its own steel safeguard quotas, is also investigating extending its safeguards while reviewing a temporary extension of the HRC import restrictions for nine months as Tata Steel UK will idle its two blast furnaces this year and not produce HRC until its electric arc furnace starts 2027.
Authors: Laura Varriale, laura.varriale@spglobal.com, Maria Tanatar, maria.tanatar@spglobal.com, Rabia Arif, rabia.arif@spglobal.com
European HRC market stays quiet while talks of Q4 quota import levels increase
The European hot-rolled coil market remained quiet amid the summer lull while market chatter surrounded increasingly full import quotas which have resulted in material being kept on hold to be cleared at ports, sources said Aug 3.
Sources expect that particularly Italian ports have at least 300,000 mt of HRC awaiting clearance at ports for the quota period starting Oct.1.
According to the European Commission, the “other country” quota for the current quota period (July 1 to Sept. 30) had been exhausted July 25 while the current quota balance for South Korea was shown as critical Aug. 3 with 92.03% filled.
“There will be a lot of material for the end of the year [in Europe],” said an Italian service center.
“Oct. 1 could see big congestions at ports,” said the source, adding that most importers are keeping the material on hold for the next quota period to avoid a 25% duty that applies when quotas have been exhausted. Import offers into Italy were heard at Eur600-605/mt CIF Italy.
Domestic HRC prices in Italy and Northwestern Europe saw no change. One mill source said prices ex-mill would be Eur670-680/mt ex-works Ruhr, while another distributor said prices from Central-Eastern Europe were at Eur620-630/mt EXW, although buying remained limited.
An Italian mill was heard to offer at Eur660-680/mt EXW for prompt.
The daily Platts assessments for HRC EXW Ruhr and HRC EXW Italy remained unchanged Aug. 3 at Eur640/mt and Eur635/mt, respectively.
Platts is part of S&P Global Commodity Insights.
Author Laura Varriale, Maria Tanatar
