The EU has finally released its updated steel safeguard on the day before its implementation, but some market sources regard the measures as lighter than they could have been.
The introduction of a 50pc out-of-quota duty, as well as lower quota volumes in most cases, will present major difficulties for importers, particularly in the third quarter, with no certainty over quota volumes until today.
The reduction of Turkey's long steel quotas was broadly as expected, with rebar and wire rod volumes down by about 37pc to just below 60,000 t/quarter and just above 61,000 t/quarter, respectively. But some of the lost volumes can be regained through the additional quota available on a first-come, first-served basis to suppliers from countries with country-specific quotas and with free-trade agreements (FTA) with the EU, once their country-specific quotas are exhausted, Turkish and European mill sources said.
This residual quota, referred to as the Free Trade Agreement-Country Specific Quota (FTA-CSQ), allows another 39,700t of rebar and 31,700t of wire rod to be imported each quarter, and will effectively be shared between suppliers in Turkey, Ukraine, Algeria and Egypt. But suppliers do not yet have clarity on how exactly the quota will be administered.
Another notable change in the long steel quota volumes is Egypt's allocation, which has been removed from the "other countries" category and increased by 30pc to 36,000 t/quarter for rebar and by 45pc to 21,600 t/quarter for wire rod. Algeria has similarly been given its own rebar quota, but its quarterly allocation is cut by 42pc to 15,900 t/quarter.
The regulator has "left enough side doors to keep importers happy", an EU mill source said. The new measures are "not so bad for Turkey", a Turkish mill said. But traders who import material into the EU are still faced with 50pc out-of-quota duties, which raises their risk exposure significantly.
China was also given its own rebar quota of 20,000t. The removal of several countries from the "other countries" category is another feature of this legislation that softens the blow of lower quota volumes and higher duties. But the quarterly "other countries" quotas are cut very sharply, to 15,800 t/quarter for rebar and 38,400 t/quarter for wire rod, with a negligible residual quota for rebar and a substantial 34,600 t/quarter for wire rod.
