EU steel importers are still seeking clarity on the technicalities of the bloc's new import measures, 10 days after the regulation took effect on 1 July.
Alongside significantly smaller free allocations, a key change in the new measure is the addition of a new residual quota. This quota is available on a first-come, first-served basis to countries that hold both a free trade agreement with the EU and a country-specific quota (CSQ) for a given product.
But market participants noted that the EU's official legislative document lacks sufficient guidance on how the FTA-CSQ quota will be administered, with different companies having different working interpretations.
The prevailing view among traders is that excess volumes in country-specific quotas cannot be automatically transferred to the FTA-CSQ category, and that many importers will have to clear the volumes they applied to customs for and pay the appropriate pro-rated duty. The exception to this would be importers in countries where customs authorities allow companies to withdraw volumes that they have applied to clear — in Italy, Spain, Portugal and Estonia. Importers in these countries will be able to remove some of their volumes from a country-specific quota and apply for clearance into the FTA-CSQ quota, some market sources understand. There is also ambiguity if the pullback mechanism is still available to importers at all, and in which countries.
Other market participants have a different understanding, with one source at a major European mill suggesting that excess volumes in country-specific quotas will clear automatically into the residual quotas if there is room.
Several market participants have expressed the view that the EU is likely to introduce some adjustments to its new import regulations within six months, as the legislation appears to have been drafted in a rush, being released on 30 June, the day before its implementation. At this point, member states were urged to vote on the regulation within 14 days.
Perhaps for this reason, there is an unusually long blocking period for the quotas of 14 days. This means that customs are not allowed to release material into the market, although for many products the unanswered questions regarding FTA-CSQ allocations means that it is difficult to estimate the payable duties with certainty. Some suggested that should companies want to receive their material during the blocking period, they would need to pay a 50pc duty deposit.
The European Commission did not respond to an Argus request for comment regarding duty calculations and volume transfers. Traders and buyers reported that enquiries sent to the commission and legal counsel have yielded no definitive clarity.
