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Consumers urge opening, fine-tuning in EC steel safeguards review

Highlights

Open market principles necessary: Eurometal

Euranimi fears semi-finished steel price 'inflation'

London — European steel stockholders and distributors' association Eurometal has urged European Trade Commissioner Valdis Dombrovskis to consider fair trade and open market principles in any revision of the European Union steel import safeguard measures, in order to protect steel consumers' interests.

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A new steel consumers' association, Brussels-based Euranimi, has also expressed concern that protectionist measures could artificially inflate import prices of semi-finished steel, resulting in an "uncontrollable flood" of cheap imported finished products, hitting importers, distributors and manufacturers alike, and by extension the entire steel supply chain.

Pricing developments over the last 18 months, and port stock positions not cleared by customers at the end of each quarter, need to be taken into account in any review, Daniel Guinabert, managing director and Fernando Espada, president of Eurometal, said in a Jan. 29 letter to the Commissioner.

Analysis of these elements might help to assess whether measures taken to control imports are really achieving their target, according to the Eurometal officers.

The current safeguards system, which has governed imports into the EU since 2018, following an import surge, is due to expire on June 30, 2021 after three years in operation. Luxemburg-based Eurometal said it recognized that the EC introduced safeguards in response to the US imposition of Section 232 steel import tariffs in March 2018, which prompted trade flow deviation to other markets.

Eurometal argued nonetheless that an open market is in the interests of steel consumers, who have faced skyrocketing steel prices in Europe in the last few months as the market has recovered from the COVID-19 related slump in March-April 2020.

Supply fluctuations in a market where some mills have continued to limit capacity working levels following the slump, coupled with state stimulus that has boosted demand in some sectors, have led some EU steel prices, including hot-rolled coil, to hit 12-year highs in recent weeks.

While the recovery is good news, the price increases that have resulted in a protected market have generated market tensions and supply and demand imbalances, "both in terms of tension in the supply chain and in terms of pricing," Guinabert and Espada wrote.

"We need the Commission to assist and care about the steel users and steel consuming industries. There will be no market for the steel production if there is not a market of consumers," the Eurometal officers wrote. "There are thousands of small and medium size companies that look for free competition to defend their products and know-how. We are talking about employment in manufacturing across Europe, which depends very much on all these medium- and small-size companies. Let's produce locally, let's generate value in Europe."

Steel distributors, service centers and traders supply some 80 million mt/year of products, accounting for more than 60% of steel and tubes supply to over 1 million end-users in EU manufacturing and construction-related sectors, according to Eurometal.

Euranimi seeks fine-tuning

Euranimi, a European association of non-integrated importers of steel, stainless steel, and metals, including distributors, processors, and traders, was set up last month. While import regulations may be "a necessary evil to ensure a level playing field between producers... the EC safeguard measures, as implemented today.... are causing uncertainty and prejudice to many European manufacturers," the association said in a Feb. 1 statement sent to S&P Global Platts.

Manufacturers' import requirements may not necessarily coincide with the quota-calendar, Euranimi executive board member Christophe Lagrange noted. In addition, some semi-finished products that fall under the safeguard measures are not produced in Europe or may be produced by mills only when their order books for higher-value products is low, he said.

"Should the current safeguard measures against the import of some steel products be extended, then Euranimi will plead for a much more refined categorization of the existing 26 steel categories," Lagrange said.

Within some product categories, quotas can be filled very rapidly by goods considered "speculative bulk-commodities," closing the door to the import by European manufacturers of specialty products they may need to import for specific projects or orders, according to Euranimi.