EU dumping case could impact over 50pc of HRC imports

The EU's impending anti-dumping investigation into four steel exporters could affect more than half of the bloc's hot-rolled coil (HRC) imports.

Next week the commission is expected to officially initiate an investigation into HRC imports from Egypt, Japan, India and Vietnam, in response to a petition from European producers' association Eurofer.

In January-May this year, these four sellers accounted for about 51pc of the EU's nearly 4.3mn t of HRC imports; in both April and January of this year, when quarterly quotas reset, they accounted for more than 58pc. This suggests that nearly 2.2mn t of this year's HRC imports could be affected by the investigation, which would create a much more captive market for domestic steelmakers.

It is not clear whether dumping will be proven, and market sources suggest this will be difficult in some cases, particularly for Vietnam and Egypt, as domestic prices in Vietnam are regularly below its export deals, they said. But even fairly small duties can affect trade flow, as evidenced by Turkey's reduced competitiveness in the EU in recent years, although aggressive Chinese prices have also had a major impact on this volume of late.

"Importing coil is becoming impossible," a service centre source said, suggesting end-manufacturers would buy finished parts from these countries instead of steel, undermining the steelmakers that the investigation is meant to protect.

"By standing on the necks of European manufacturers like this, the commission is going to kill consumption in Europe," a trading firm posted on social media. An executive with one trading firm said the commission should exempt low emission steel "if they really care about CBAM [the carbon border adjustment mechanism]".

Despite the potential outsize effect of the investigation, physical prices have not moved, given the current market malaise and the typical duration of EU investigations. Since Argus broke the news of the investigation on 25 July, the benchmark northwest EU HRC index fell by €14.75/t to €605/t on Thursday.

The typical timeline for EU anti-dumping cases now is for provisional duties at eight months and definitive measures after 14 months, assuming dumping is proven.

A steelmaking executive said the dumping case "should support" prices headed into the fourth quarter of this year and the first of next year, by which time service centres' will have destocked and have to return to market.

So far, Japan, Vietnam and India have been informed of the case, according to market participants and diplomatic notes seen by Argus.

By Colin Richardson