The UK steel market remains largely opposed to the sweeping new trade quota system; despite expectations it would lend significant support to domestic price levels.
Speaking at the International Steel Trade Association networking event June 11, market participants criticized the proposed quotas that will come into force July 1 and remained skeptical that any changes would be made to the proposals prior to the commencement of the measures, despite additional pressure voiced by trade unions this week.
Other sources at the fair referred to UK steel producers’ systematic inability to either meet product demand or actually produce certain types of steel. For instance, hot-rolled coil over 2 meters wide is not domestically produced in the UK market, forcing consumers to look abroad for this material. However, despite not being produced domestically, it would still fall under the general category 1A quota for HRC.
The category 1 quota was significantly slashed by UK policymakers. For EU origin material, a revised annual quota was proposed of 68,226 metric tons from July 1, about a 90% decrease from quota levels under the current measures. For South Korea, a new country-specific quota was proposed, allocating just 3,258 mt per year. India will also have its own annual quota of 12,405 mt.
The ISTA organization has repeatedly called for the proposed safeguards, as part of the UK’s Steel Strategy, to be significantly altered, stating via LinkedIn that “importing steel once these measures are fully in place will be in practical terms, nearly impossible for many products,” and that “the duty risk of 50% will make pricing uncompetitive for the final end users.”
“I expect prices to increase regardless of demand,” said a service center source, at the event. “It will really tighten the market, and unless something changes, specific grades just won’t come through.”
The same source said that he expects the recent fire at Tata Steel’s Port Talbot site to have little impact on the UK’s finalized quota decision, and that only the supply of hot-rolled pickled and oiled material could be affected.
Platts, part of S&P Global Energy, assessed HRC [S275JR] in the UK at GBP 705/mt DDP West Midlands June 11, stable week over week, but up GBP190/mt since the start of the year.
Although broader attitudes towards demand remain largely negative through this period, market participants have cited that the market continues to hold regulatory-based support, with some stock building ahead of the quota start date.
“People have booked heavily for June,” one EU-based mil source said.
“I think service centers are out of the market for the time being, and their stock may take them into July or August,” the source added.
Author: Charles Thompson, Riley Waters
