25/01/15
Risks leave EU buyers with limited HRC options
London, 15 January (Argus) — Impending tighter EU import trade measures, coupled
with an unfavourable exchange rate, have stymied buyers' options for hot-rolled
coil (HRC) to mostly just domestic and Turkish material. As a result, import
volumes between February and June are likely to fall, with very limited trade
occurring over the previous quarter. Import trade at the start of January is
continuing at a very slow pace, and quota data show January arrivals were
already considerably lower than in previous quarters. Exports from Asian
suppliers to the EU over the last months of 2024 appear to have dropped,
according to available Global Trade Tracker data. In November around 250,000t of
HRC was exported from South Korea, Taiwan, Indonesia, China, Australia and Japan
to the EU. Most of that will be likely to arrive and clear in the current
quarter, as Indonesia and China are exempt from the safeguards, Australia has
ample quota availability and South Korea's allocation is regulated. Under
50,000t of what was exported in November, most of which was from Taiwan, is
likely to be clearing in April, as it is possible that it did not make it in
time to go through customs in January duty-free. November data for large
historical suppliers India, Vietnam and Ukraine are not yet available, but
volumes from the former two have dropped because of the ongoing anti-dumping
investigation. The probe has further stopped the flow from Egypt and Japan. "I
don't think EU will buy material from India until 25 March as future duties are
not clear," a producer said. "We will all be very cautious — if someone is
taking the risk without knowing the anti-dumping rate for the origins under
investigation, it is quite a crazy decision," a buyer said. Exports to the bloc
from many suppliers are unlikely to resume until there is more clarity on the
dumping investigation and the safeguard review. Mills under scrutiny have
expressed expectations of duties at 8-10pc, but some traders and buyers say
tariffs could be similar to those on China, especially for Vietnam. Import data
show that in April last year 1.4mn t of HRC was imported into the EU. Of that
amount, Argus estimates over 1mn t could be affected by upcoming trade measures,
and around 300,000t worth of supply — from Turkey, Ukraine, South Korea and
Serbia — would today be deemed less risky by buyers. While it is likely that
those countries could ramp up their exports over the first half of this year,
and in fact have already started doing so, there are limits to how much each can
supply — be it because of country-based quotas, existing duties, or in Ukraine's
case limited production. The safeguard review is likely to see duty-free quota
volumes reduce too. In October those four countries supplied around 500,000t to
the EU. In January so far, quota data show only 50,000t cleared from Turkey,
South Korea and Serbia. Currently, the weaker euro against the US dollar is
making imports, even from the above countries, unfavourable, so purchasing is
scant. Demand remains a big question. "Buyers are sceptical about demand
recovery and inventories are often on the high side leaving buyers some time
before returning to the market," a trader said. Despite continued slow demand at
the start of the year, reduced import supply will reduce availability in the
bloc, which could ultimately boost prices. The Argus northwest EU and Italian
HRC indexes have already started moving up since around mid-December, up by
€25.75/t and €11.75/t, respectively, as of 14 January. "At the moment EU supply,
as well as from Turkey, is more than adequate. For this reason I really doubt
that buyers will take many risks. That situation is badly affecting imports but
for sure is helping EU producers to defend current prices in a stagnant market
in terms of apparent demand," a buyer said. "I would expect lack of material, as
no-one is willing to take the risk of a cif purchase from those [higher] risk
countries and, and Turkey and the EU may not be enough," a third trader said. By
Lora Stoyanova Send comments and request more information at
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