Nordic market opinion divided over revised steel safeguarding measures
Amended safeguarding measures for the EU steel industry will be applied from July 1, 2020. These include new, country-specific quotas for hot rolled coil imports, and quarterly management of quota tonnages for all products.
Many Nordic traders and end-users fear that these changes will disrupt the supply of imported material. European steel producers, conversely, assert that overall import volumes should be further restricted, during the current crisis.
The measures were introduced by the European Commission to prevent serious injury following the increased imports and trade diversions caused by the United States decision to impose Section 232 tariffs on steel products. The significant fall in steel demand, following the coronavirus pandemic, has resulted in calls for the import quotas to be slashed, to protect beleaguered European steel producers. Nonetheless, the EC has retained its plans to increase the annual quota volumes by three percent from July 1.
Despite several countries relaxing Covid-19-related restrictions, end-user consumption remains subdued, throughout Europe. Many customers built their inventories, earlier in the year. Consequently, steel availability exceeds demand. Mill prices, for coil and sheet products, fell by between five and thirteen percent, in the Nordic region, in June.
Automotive holds the key
Demand for galvanised sheet, in Denmark, will remain weak as long as activity in the European automotive sector remains depressed. Sellers of coated sheet and coil, in Finland, are heavily dependent on the auto supply chains in Sweden and Germany, which remain subdued.
Carmakers, in Sweden, are increasing their operations but they remain far below normal levels. Local truck manufacturers’ operations are picking up, but Volvo AB has recently announced it will cut 4100 jobs worldwide.
Continued low demand and ready availability of steel will restrict producers’ efforts to increase selling prices, in the short term. The new import quotas open on July 1.