The European Commission's proposed changes to its import steel safeguard quotas, starting from 1 April, are expected to affect volumes for hot-dip galvanised (HDG) and cold-rolled coils (CRC) because of proposed caps on individual suppliers' access to the "other countries" allocation of 13-25pc depending on product category.
For CRC the cap stands at 13pc, impacting key suppliers Vietnam, Taiwan, Japan and Turkey. The new CRC "others" quota volume will total 334,369t in April-June for other countries, which leaves 43,467t per supplier. The change mimics the cap introduced last year on hot-rolled coil (HRC) quotas.
The limit for galvanised steel imports are higher, with 20pc cap on 4B auto-grade HDG imports from other countries, with Turkey, Vietnam and Japan identified by the commission as major suppliers. The cap is at 25pc for 4A HDG quotas, impacting Turkey, Vietnam and Taiwan.
This would allow each country under other countries to supply 118,012t/quarter of 4A HDG, with the total volume for the quota at 472,049t for the coming quarter. For 4B HDG, the quota for other countries will be 104,770t, leaving 20,955t per country.
Remaining volumes from previous quarters will not be carried over starting from 1 July for CRC and 4A HDG, but for 4B HDG quotas, the mechanism will remain in place.
In 2024, imports from Vietnam, Turkey, Taiwan and Japan amounted to 2.15mn t for HDG into the EU, including both 4A and 4B categories. In the last quarter of 2024, Vietnamese HDG imports into the EU alone amounted to 321,405t, equivalent to over 56pc of the total other countries quota for that period for 4A and 4B combined. The total volume of 4A and 4B that Vietnam will be able to tap into from April will be just under 140,000t.
Reactions from Turkish market participants were mixed today, but expectations are that reduced Vietnamese volumes might aid Turkish sellers of HDG, despite the fact that Turkey will also face the same cap as well as dumping duties. Vietnam has been taking up a large portion of the quota, with the changes now likely to allow more volumes to flow into the EU from other suppliers.
Combined CRC volumes in the EU from Turkey, Japan, Taiwan and Vietnam amounted to 1.38mn t in 2024 and in the fourth quarter alone reached 339,909t. This will cut CRC imports sharply as under the current adjustments, other countries will have 43,467 t/quarter allocation each for the April-June period.
Initially a more substantial reduction in quota volumes was anticipated, as per European steel association Eurofer's request. With the exception of Vietnamese HDG, the adjustments are not likely to change import volumes drastically, according to market participants.
"The cap on CRC and HDG quotas will reduce our exports but we were expecting harsher reductions. We still have our separate allocation for HRC, and we can offset our exports through HRC sales," a Turkish producer commented. "But what will happen to all the new capacities? Volumes could be directed to the local market, challenging domestic producers," a re-roller said.
