Quota liberalisation could be reversed for steel

Market: Metals
06/02/25

The liberalisation of hot-rolled coil (HRC) quotas since 2018 could be reversed in the European Commission's functional safeguard review, according to market sources.

This alone would lead to a volume cut of about 15pc since the quotas were introduced.

European producers' association Eurofer has requested a 50pc cut in flat product quota volumes, to align import share with 2012-14, when it says apparent consumption was last in line with current levels. Eurofer estimates import share on flat products at nearly 28pc this year compared with an average share of just over 16pc in 2012-14.

Eurofer removes HRC destined for internal processing into cold-rolled coil and hot-dip galvanised coil from its calculation of overall market supply. Including HRC for internal processing, import share has risen from just below 6pc since 2012-14 to more than 14pc, according to Argus calculations.

The average HRC import rate over 2012-14 was 4.73mn t/yr, which is about 85pc lower than the 8.8mn t likely to be imported in 2024 — this assumes imports of about 300,000t in December 2024, calculated from a quota drawdown during the period with some additional material from countries exempt from the safeguard on HRC.

Sources suggest there cannot be a wholesale cut in quota volumes that is compatible with WTO rules, but that the repeal of liberalisation and some other fine-tuning measures could add up to a meaningful revision. The proposal to reduce the 'other countries' cap to 7.5pc from the current 15pc would effectively halve potential volumes from sellers within that quota, such as Japan, Vietnam and Egypt. Removing carryover of unused quota and including previously exempt countries into the quota would also have an impact. Imports could potentially be capped at a certain share of overall supply, some said, although it is not clear how this could be administered.

The commission has received significant feedback from the buy side of the market, given the substantial reduction sought by Eurofer and its potential impact. Some buyers suggest 2017 or 2018 could be a more accurate point of reference than 2012-14. During this period, imports have risen by almost 32pc from 6.6mn t, while market supply has contracted by about 28pc, led by domestic output dropping by almost a quarter.

By Colin Richardson

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