Eurometal urges EU to adjust steel safeguard measures

02/02/2021

The European stockholders and traders association Eurometal recently urged Valdis Dombrovskis, EU’s new trade commissioner, to modify the steel safeguard measure in order to protect the steel industry amid surging steel prices.

Eurometal indicated that it has to consider the price change in the past 18 months and some inventory status at the port at the end of the quarter deciding the EU’s steel safeguard measure.

The recovery of the market is still facing tension relation between the supply chain and pricing at present. The European Commission (EC)’s assistance on the market for steel users and consuming industries was needed, so as to solve the imbalance between supply and demand.

Since 3 June 2019, Argus‘ benchmark northwest EU hot-rolled coil (HRC) index has risen to €707/t from €476/t, an increase of €231/t. Pent-up demand and a lagging increase in supply since September last year has seen appetite outstrip production, leading to huge price jumps in the past few months — the index has soared by €309/t since 8 June 2020.

The surge in demand and softer supply has been exacerbated by a lack of import penetration in recent months. The EU imported just 257,813/t of HRC in November last year, Eurostat data show. This was the lowest import figure in almost eight years. The reduction was driven by a number of factors. Covid-19 impacted the European industry heavily, meaning local prices were lower than those in the rest of the world, reducing import demand over summer. At the same time, a number of regions cannot sell into Europe because of dumping duties — China, Russia, Brazil, Serbia and Ukraine all have duties that keep volumes in check. Turkey now has a provisional dumping duty, while the duty of Severstal, the only Russian producer that can still sell HRC into the EU, is being reviewed after petitions from Eurofer.

European producers would suggest nothing has changed since the steel safeguard was implemented in response to Section 232 in the US. While Donald Trump has left office, the duties are still in place, meaning Europe could be hit with more imported material if the measures lapse.

At the same time, service centres would point to current spreads to blast furnace raw materials — at $442/t yesterday — which are at record highs. Some European mills have „derisked” their businesses by targeting the booming North American market of late, while limiting contractual tonnages for domestic buyers. Service centres would argue they should be able to procure the requisite tonnages from domestic producers, given they are protected from third-country tonnes.

 

CBAM