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EU import quota for Chinese auto-grade coated steel sheet already filled almost by 40%

London — Traders are shying away from importing Chinese coated steel sheet used primarily for automotive applications, as preliminary data from the European Commission shows that awaiting allocation volumes have already reached almost 40% of the quota, according to sources Friday.

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The EC will officially allocate volumes from Monday next week when the blocking period ends, but data on the EC website already shows that awaiting allocation volumes have reached 81,000 mt for Chinese coated steels in category 4B out of 204,951 mt of the total import volume for the February 2 to June 30 period.

"I immediately stopped buying category 4B from China," said a German trader.

Although volumes for that product have actually increased from the proposal stage in December to the final regulation that came into force February 2, trading sources say volumes would still not be sufficient.

"Quotas are still low from China," said a Benelux source. "We are wondering whether we're doing imports [at all]. We're losing turnover of our business because of quotas."

However, not only Chinese quotas saw a change from the quota proposal to the final regulation. Also the country-specific quotas and "all other countries" quotas saw changes in the metallic coated sheets categories 4A and B, although most of them decreased in 4A and were increased in 4B.

Sources suggested that car makers were influential during the consultation period between early this year, as category 4B is primarily used for automotive applications and 4A for construction.

The EC did not respond to a request for comment Friday.

The commission, however, acknowledged February 2, when the regulation became effective, that for auto grades "there is a risk that some specific product types are crowded out from the free of duty quota by standard products that can be massively supplied and stockpiled at the beginning of the year."

For the first period until safeguard quotas expire in 2021, the Korean quota in category 4A were reduced by 63.4%, the Indian quota fell by 41.2% and all other countries dropped 9.4%.

For category 4B, the Korean and Indian quotas were almost doubled, while the all other countries quota went up 77.1% in the final regulation.

Even though quotas increased for 4B, due to increasing import prices, traders find it difficult to find competitive offers at the moment.

Buyers are returning to European mills that could potentially make ground for some increases. However, while Italian domestic hot-dipped galvanizing prices saw a rebound the week ending Friday to Eur569/mt exw from levels between Eur545-555/mt exw following a dip in late January/early February, prices in Northern Europe have stagnated.

Prices for HDG in Northern Europe saw little movement and remained at around Eur600/mt exw Ruhr for DX51D grade in the week ending Friday.

-- Laura Varriale, laura.varriale@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com