UK HRC quota recommendation 'unworkable': Stemcor

The UK Trade Remedies Authority's recommendation to change hot-rolled coil (HRC) import quotas is "unworkable", according to steel trader Stemcor.

In a letter to the TRA, Stemcor questioned the "fairness" of a global non-country specific quota for category 1B, while keeping a "very restrictive" and "unworkable" country specific quota for 1A — the TRA has recommended splitting the current HRC quota into two, adding a larger global quota for downstream processing under 1B.

The TRA's recommendation is highly aligned with Tata Steel's requests, to the chagrin of other importers, including service centres.

"We strongly believe it is incorrect and inequitable to use historical, out-of-date statistics for the purposes of calculating a TRQ on 1A when giving no restriction whatsoever on 1B," Stemcor told the TRA. It also said it is "concerned" there is no provision in the recommendation restricting domestic producers from using 1A. This leaves the quota "open to abuse", the trader suggested. Traders and importers have said Tata Steel should not have access to 1A, given the quota of around 1.9mn t granted for 1B, which will largely be utilised by Tata Steel, although a few other companies can access it too. Under its own proposal, Tata's distribution business would still be importing HRC under 1A.

Tata said 1B should be policed to prevent it being abused by companies who do not use it for "downstream processing". In its filing to the TRA, Tata said "downstream processing" involves the transformation of HRC into cold-rolled, metallic coated sheet, organic coated sheet, tin mill, gas pipes, hollow sections, large welded tubes and other welded pipes. "TSUK notes that there is a limited number of UK companies that have the capabilities to carry out downstream processing as defined above. TSUK respectfully suggest that this factor is taken into account when assessing applications for authorisation from other UK companies," it said.

The International Steel Trade Association (ISTA) has argued that other products manufactured from imported HRC, such as cold-formed sections and corrugated steels, should also be given access to 1B. Traders also question whether one company should be able to define "downstream processing".

As with its member Stemcor, ISTA said the 1A quota should be global, in line with 1B — much of the existing quota is comprised of European material, which is costlier than material from elsewhere that will be freely accessible to Tata under a global 1B quota.

By Colin Richardson