GCC opens steel antidumping investigation

The Gulf Co-operation Council (GCC) region — encompassing Saudi Arabia, the UAE, Bahrain, Kuwait, Oman and Qatar — has launched an anti-dumping (AD) investigation into a range imported of steel products.

The investigation period covers the period from 1 January 2014 to 30 June 2019 and is expected to be complete within 12 months.

Products to be investigated are:

• Flat hot-rolled coil and sheet — HS codes 720827, 720837, 720838, 720839, 720851, 720853, 720854, 721113, 721114 and 721119;
• Flat cold-rolled coil and sheets — HS codes 720916, 720917, 720918, 720926, 720927, 720928, 720990 and 722550;
• Metallic coated steel — HS codes 721030, 721049, 721069, 721220, 721250, 721260, 722591, 722592 and 722599;
• Organic coated steel — HS code 721240;
• Reinforced steel bar and wire rod — HS codes 721310, 721320, 721391, 721399, 721410, 721430, 721510, 721550, 721590, 722710, 722720, 722810, 722820, 722840, 722850 and 722860;
• Circular, square and rectangular stick and rod — HS codes 721491, 721499, 722211 and 722219;
• Sections — HS codes 721610, 721631, 721632 and 730810;
• Angles and shapes — HS codes 721621, 721650 and 730120;
• Welded and seamless pipe and tube, including items for transporting water, gas and oil — HS codes 730424, 730520, 730531, 730539, 730611, 730619, 730640, 730661 and 730690

Imports continue

According to the investigating committee, there has been an increase in imports of these products into the GCC region over the period, damaging domestic industry. But trade data show imports of the selected products have generally fallen from a peak in 2015.

Some 14mn t of hot-rolled coil (HRC) was imported in January 2014-June 2019 period, according to trade data. Receipts peaked in 2017 at 3mn t, but this fell to 2.4mn t last year. And imports in January-June 2019 were less than 1mn t. But the UAE's imports have held steady at 1.4mn t/yr.

Cold-rolled coil (CRC) imports totalled 1.4mn t in January 2014-June 2019, also peaking in 2017, at 316,397t. But the UAE's imports surged from 155,255t in 2014 to 216,667t in 2018, although it received just 40,580t in the first half of 2019.

Rebar and wire rod imports in January 2014-June 2019 totalled 4.6mn t. Most of this was imported by Saudi Arabia, which received 2.4mn t, but Saudi Arabia received only 285,620t in 2017 and 140,637t in 2018. Overall GCC rebar and wire rod imports fell from from a peak of 1.3mn t in 2016 to 599,779t in 2017 and 369,131t in 2018. And in the first half of 2019, the region imported just 82,921t.

Limited export opportunities

One sign of a weak regional market is the start of exports from GCC mills. Last month, GCC mills were heard offering billet and rebar into southeast Asia, with some deals concluded. But GCC mills typically seek large markets, where they can sell large cargoes of at least 30,000t, so their options are mainly limited to southeast Asia and China.

But as billet prices rise, the arbitrage window with China closes, as buyers in the country target $410/t cfr. GCC mills could achieve far higher billet prices on an ex-works basis, despite weak demand. Two weeks ago, offer levels were heard at $380-390/t cpt Oman.

Southeast Asian markets are also becoming saturated with finished and semi-finished steel as Turkish and CIS mills target them for rebar and billet sales. Malaysia has even imposed anti-dumping duties on Turkish and Singaporean rebar, and was heard to have sold a billet cargo into China last week, suggesting an offloading of excess capacity.

Global overcapacity

It is clear the GCC region is struggling with flat demand and limited export opportunities to shift excess capacity. Production data show GCC crude steel output has largely contracted in the last year — from 974,000t in August 2018 to 955,000t in August 2019.

Many domestic suppliers expected regional governments to announce construction projects after the Eid al-Adha holiday in the first half of August. But no significant works materialised and, as a result of flat demand, domestic producers have been forced to cut their prices. UAE-based Emirates Steel — generally recognised as the region's price-setter — this week announced a drop in rebar prices of Dh81/t to Dh1,656/t ($450/t) ex-works for November production. In July, UAE steel rebar was assessed by Argus at Dh1,849 ($527.36/t) — it has lost over $70/t in the last two months.

Other mills in the region are concerned about price levels, according to market participants. Last month, a second GCC mill undercut Emirates prices significantly, meaning it is operating at a loss, according to a source at a third mill. But the only other option is to shut down production. "There is no longer a question of profit. Mills are making losses, but now the strategy is to try to minimise the loss," the source added.