The International Steel Trade Association is suggesting tariff-rate quotas following a temporary suspension of hot-rolled coil import quotas into the UK, ISTA told S&P Global Commodity Insights March 1.
ISTA members met with the UK Trade Remedies Authority Feb. 28 to discuss the import situation particularly for category 1 hot-rolled coil as steelmaker Tata Steel will be starting to idle its two blast furnaces by the end of 2024 and commission and electric arc furnace in 2026. It would import steel products for customers during the idling from its Dutch and Indian mills and third parties.
The TRA started a suspension review of TRQs on Category 1 steel Feb. 9 while also recommending a nine-month suspension.
Julian Verden, managing director of trading house Stemcor Europe and ISTA’s chairman, told S&P Global Commodity Insights that a short suspension of quotas would not work.
“A longer one is needed, not only because it will give more time to better assess the implications of Tata’s proposed changes but mainly because it will help buyers as importers often purchase on longer lead times, usually from three to six months,” Verden said.
‘’It is key that all Tata’s likely logistical issues are taken into consideration when reviewing the current safeguards. There will be continually changing circumstances which will require great flexibility from the TRA.‘’
Due to the market fragmentation of ISTA members, there are different views on how the review should end. Most members S&P Global asked agreed a suspension should be put in place for nine months starting from April or even better in July, and after that the reconsideration of the quotas.
The TRA’s position is that a suspension for the Category 1 coils safeguard measure would provide temporary relief in the market, while the TRA finishes the TRQ review. It would suspend the TRQ for Category 1 steel products on the basis that there has been a temporary change in market conditions and no injury is likely to be caused to UK producers as a result. The TRQ review is looking whether the TRQ should be amended to reflect changes in the market since the safeguard started.
Sources said determining a quota rate would not be clear how much Tata will start to import, becoming effectively an importer of hot rolled coils and then transforming them into cold-rolled or hot-dipped galvanized coil, a move criticised by worker representatives who called for a ballot on a potential strike in April. The ballot will start March 8 and end April 11.
According to sources, TRA representatives gave an example that maybe even a quota based on importers historical volumes can be taken under consideration, but this will penalize new importers that just entered in the UK market as some sources pointed out.
“This idea will reduce market opportunities to newcomers like us, as we have recently begun purchasing Category 1 HRC; however under historical data this won’t be recognized,” Oliver Roe, CEO of OPR Group, said in the sideline echoing other importers. The company started to trade in July 2023.
Some import quotas have been swiftly filled early in the year, leaving importers unable to import from certain countries or pay an import tax up to 25%.
The HRC quota for the all other country quota category of the current period (January-March) was exhausted Jan. 18, while the quota for Taiwanese HRC imports went critical Feb. 2, leaving 1,378 mt left to import as of March 1. HRC imports from the European Union stood at an available balance of 235,351 mt March 1, and the quota balance for Turkish HRC stood at 37,005 mt March 1. The new quota period opens April 1.
Platts assessed UK HRC at GBP650/mt DDP West Midlands Feb. 29, down GBP20/mt week on week.
Authors Annalisa Villa, annalisa.villa@spglobal.com, Laura Varriale, laura.varriale@spglobal.com
