Turkey’s safeguard case ‘will not affect import volumes’

Trade safeguard measures applied by Turkey will have no effect on the country’s traditional import volumes, delegates to the EUROMETAL Steel Net Forum & International Steel Trade Day in Hamburg, Germany, heard on Tuesday October 9.

This was because the measures do not apply to imports of steel products acquired for processing and re-export, and also taking into account the sufficient volumes of the quotas being used.

In the second half of September, Turkey imposed provisional measures in the form of product-specific tariff rate quotas (TRQs) for imports of flat steel, long steel, iron and steel pipes, stainless steel products and railway equipment. Tariffs of 25% will only be imposed once imports exceed the specific quotas. The additional payments will be levied for a period of 200 days.

The quotas were set at 3.12 million tonnes of flat products, 558,534 tonnes of long products, 273,901 tonnes of iron and steel pipes, 139,934 tonnes of stainless steel products, and 27,044 tonnes of railway equipment.

Turkey imported 4,021,152 tonnes of flat steel in January-June 2018, up by 4.54% from 3,846,450 tonnes in the corresponding period in 2017, according to the Turkish Statistical Institute (TUIK).

The measures set in Turkey were similar to those imposed recently by the EU.

The European Commission (EC) imposed preliminary measures in a safeguard case on July 18, in the form of tariff rate quotas on 23 steel product categories, based on average import volumes over the past three years. Imports will face a 25% tariff if a quota is exceeded. These provisional measures will also remain in place for a maximum of 200 days.

“The quotas set refer only to volumes going to Turkey for final consumption,” Yuriy Rudyuk, partner at Brussels-based law firm Van Bael & Bellis, told the conference delegates. “The processing of imports – for example, bringing hot-rolled coil [HRC] for tube production into Turkey – and the export [of processed products] are not subject to these quotas.”

Fastmarkets’ weekly price assessment for Turkish HRC imports was $530-550 per tonne cfr on October 5, falling from $550-555 per tonne cfr. The assessment fell on lower offers from the CIS, driven downward by oversupply and buyers’ fears of further price reductions.

“The quotas are set at the normal level [of trade], so there will not be any big changes in the Turkish steel market. Plus, the quotas do not include material that is used in the production of exported goods,” a Turkish distributor said.

In addition, the current exchange rate was not helpful toward buyers’ demands for imported steel, sources said.

The Turkish lira has lost a significant amount of value since early August, when political tension between Turkey and the United States worsened. The lira was trading at TRY100 to $16.34 on October 10. It had been trading at TRY100 to $18.39 on August 10, and TRY100 to $21.77 on July 10, according to exchange rate website Oanda.com.

In the meantime, the new safeguard regulations have caused confusion among Turkish customs authorities. They have been trying to obtain bank guarantees for the 25% duty despite the fact that the volume of imported steel has not exceeded any quotas.

“There is a confusion on the customs side because they have not received the details of how the quota will be followed. Customs wanted to guarantee the deposit of [duty at] 25% with the intention to return this money when it became clear that [the material was] not subject to duty,” Tayfun Iseri, vice president of flat steel import, export and industry association Yisad Turkey, said.

The problems with customs were expected to be resolved in about two weeks’ time.

European importers of steel faced similar problems with customs in a number of the EU member states in August, after the EC set its preliminary measures. In this instance, however, market soures said that the problem was solved within a week.

Maria Tanatar, fastmarkets.com