EU arbitrage opening for lowest-duty Chinese HRC

Sales opportunities could be opening up for Chinese hot-rolled coil (HRC) exports to the EU.

Chinese exporters are subject to both anti-dumping (AD) and countervailing duties (CVD) in the bloc, with the combined lowest for Hesteel and Handan at 18.1pc. Both are subject to 10.3pc for AD and 7.8pc for CVD.

Chinese HRC prices have today hit another low, with the Argus fob China assessment at $480/t fob. Lower Chinese offers were heard available too into some destinations. With freight at around $50-60/t from China to the EU, and a combined duty of 18.1pc, the duty included price comes to just over $630/t cfr, or €580-590/t cfr. There have been offers into the EU lately from risk-free origins at €580-590/t, either exempt from safeguards or with ample quotas. They are of limited interest at present, given weakening domestic prices.

China itself is not subject to the EU's safeguard measures under product category 1, HRC. So, should the arbitrage remain, China is relatively risk free compared with countries with individual or capped quotas. Potential dumping cases on sellers under the other countries' quota could also increase the perception of China as a safer option.

Some large EU buyers have the ability to purchase Chinese HRC without paying dumping duties provided the material is processed and exported outside the EU.

Chinese export prices have come under further pressure this week after the launch of an anti-dumping investigation in Vietnam on Chinese HRC — Vietnam has been a key market for China, which shipped over 4mn t to the country in the first six months of this year, compared with just over 6mn t in 2023. Brazil has recently also clamped down on imports, introducing tariffs that mainly target Chinese imports. India is expected to initiate a dumping case on Chinese HRC, while market participants suggest Taiwan could also announce a case soon.

By Lora Stoyanova and Colin Richardson