Buyers and sellers are unhappy with the flat product quotas proposed by the UK department of business and trade and want them to be amended.
A domestic producer has called for an emergency meeting with the government to discuss the matter, sources said.
The proposed cut in hot-rolled coil (HRC) — down by more than 800,000 t/yr to about 102,000 t/yr — is deemed too big, as the local producer would struggle to fulfil this additional demand and is unable produce some of the dimensions required by the market.
Consumption of 2m-wide HRC exceeds the new proposed quota, buyers said. Germany alone supplied more than 96,000t to the UK last year, import data show, with around 80pc of that (approximately 76,850t) likely 2m wide. Buyers and shipping sources said they import 2m-wide material under HS codes 720836, 37, 38 and 39, depending on the thickness. This exceeds the entire EU quota allocation of 68,226t for all gauges of HRC. But there could be other widths contained in imports under these codes.
Buyers are happier with the reduction to the hot-dippped galvanised (HDG) quota, which is down from 1.9mn t to 1.1mn t, but sellers and even some buyers have questioned the increased tonnage given to South Korea and Vietnam. Vietnam has a proposed annual quota of 174,367t and South Korea 100,753t, totalling over 275,000t, compared with 50,938t each under the current capped quota. There has been talk of a potential anti-dumping case on HDG from multiple countries in the past nine months and both would likely be in scope, so it seems strange to increase their shares at the expense of more established supply from Europe and elsewhere, sources said.
The quotas for both categories would likely have to be changed, mill sources said. One problem is the lack of clarity over UK quotas into the EU. UK access to the EU may not even be clear by 1 July, when the new measures in both regions begin. The more access UK mills get to the EU market, the less domestic protection they require.
There is also concern over rebar, non-alloy merchant bar and sections availability, given the extent of the reductions. Turkey has lost its ~13,000t/quarter quota under the proposed 12B quota, while buyers said the quotas for cold-drawn bar are also low. EU sections producers are also unhappy at the extent of their cut.
The department of business and trade does "not comment on leaks and will publish the full details of our measure shortly", it said.
The equilibrium of discontent suggests that the final volumes will be different than those contained in the leak.
