US steel quota to be by product and country

Market: Metals
01/11/21

The US will partially replace Section 232 tariffs on European steel with a tariff-rate quota allocated on an EU member state basis in line with 2015-17 volumes.

The quota, totalling 3.3mn t, will come into effect on 1 January 2022, according to a joint US-EU statement obtained by Argus. The quotas will fall under 54 product categories and be administered on a first-come first-served and quarterly basis.

Up to 4pc of unused quotas can be rolled over into the quarter after next, and the US will review the quota volume every year — where US apparent consumption falls or rises 6pc above 2021 levels, according to Worldsteel, the quota volume will be fall or rise by 3pc.

The hot-rolled coil (HRC) quota will be most beneficial for Dutch and German producers, which have the largest share of European exports into the US. Producers from the two accounted for over 73pc of EU HRC shipments into the US in 2015 and more than 63pc in 2017-20.

HRC shipments from Holland into the US are subject to a 3.73pc duty, while German shipments pay no duty other than the current 25pc Section 232 tariff. Sweden has also consistently accounted for more than 10pc of total European shipments into the US. Steelmaker Tata Steel has sold around 195,000t of coils into the US this year from its Ijmuiden site in Holland, according to ImportGenius data. European mills sold 165,561t of HRC into the US in January-July, according to Eurostat data — the ImportGenius data track bills of lading, and are more up to date than the Eurostat customs data.

The EU sold an average of 1.2mn t/yr of HRC, cold-rolled coil and hot-dip galvanised coil into the US in 2015-18, when carbon steel shipments averaged around 3mn t/yr. The 1.1mn t of European material exempted from Section 232 will be on top of the quota, and the EU predicts there will be greater exclusions for European steel, meaning the overall quota would be larger than 4.4mn t/yr.

The melt and pour clause in the deal, meaning steel will need to be made in Europe and not using semi-finished product imported from elsewhere, could be problematic for re-roller and mills that are using slab from other regions.

The news of the Section 232 revision saw CME Group's north European HRC contract increase in liquid screen trading, as of 16:20 GMT. November traded up by €32/t to €1,002/t, while December and January firmed by €59/t and €55/t, to €994/t and €970/t, respectively. February was up by €45/t to €945/t, while March rose by €34/t to €924/t. But the CME's US contract for November and December slipped by $23/short ton and $21/st, while January and February rose by $39/st and $37/st, respectively.

"With regards to US import tariffs on steel, it is important for EU steel producers exporting to the US that the new provisions — introducing a tariff rate quota system — take into account traditional EU export levels within a stable framework, and that the product exemptions for EU steelmakers already in place are maintained or renewed", Eurofer director general Axel Eggert said.

By Colin Richardson, Marialuisa Rincon and Haik Gugarats

EU US share

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