|EU safeguard quotas likely to hit long steel exports
|Turkey - 2019 January 13
Import data for February-July last year show that proposed definitive EU safeguard quotas will be more restrictive for Turkish rebar and wire rod, while the allowance for hot-rolled coil (HRC) and cold-rolled coil (CRC) will be more than adequate.
Market participants have largely shrugged at the allocated volumes for flat products, which for the 2 February-30 June 2019 period will be 3.36mln tons, the equivalent of 22,547 tons per day. Over the same period in 2018, average imports of HRC were only 18,332 tons per day, before rising in the second half of the year to average 22,445 tons per day in January-October.
There is still nearly 30pc left of the preliminary quota for HRC, and over 40pct for CRC, while the allocations for rebar and wire rod were exhausted at the end of 2018.
The EU has allocated 117,232 tons for the first period to Turkish rebar, equivalent to 787 tons per day, significantly lower than the 1,961 tons per day imported in February-July and 2,167 tons per day in January-October.
At the same time, the quota allows 1,462 tons per day to be imported from other countries, meaning all exporters except Turkey, Russia, Ukraine, Bosnia-Herzegovina and Moldova, which compares with 1,058 tons per day imported from other countries in February-July 2018.
That said, there are only two other rebar exporting countries with a significant interest in Europe, Belarus and Norway. Norway is exempt from the safeguard measures.
Belarus has faced a 10.6pct anti-dumping duty in the EU since June 2017, despite which it has continued to sell, supplying 137,913 tons in the first 10 months of 2018.
While this is significantly lower than the amount Turkey supplied, industry data show Belarus could increase exports to the EU if it can get a premium price, as in 2018 it exported large amounts to the CIS, Israel and other destinations. But with the exception of the UK, Belarus has targeted different markets within the EU, which is why there is likely to be some residual amount left in the "other countries" quota from 1 April, when it becomes available to Turkey and all other exporters with allocated volumes.
The situation for wire rod is similar for Turkey, with average daily imports in February-July 2018 at 2,360 tons compared with a quota allocation of 814 tons per day in the period until 1 July 2019. Even if Turkey gets access to the entire "other countries" quota for wire rod, which averages 819 tons per day, this would not come close to the volume the country sold to the EU in 2018. In addition, there is a higher number of countries exporting wire rod to Europe compared with rebar, with Norway, South Korea, Japan, Bosnia-Herzegovina and Brazil all having sold some wire rod there in 2018.