Concern grows over EU steel rebar safeguards

Many Turkish mills and some European buyers are concerned about the potential volume allocated by the European Commission (EC) to Turkish rebar imports, as proposed in a document obtained by Argus last week.

The quota could change from the levels specified as the notification is not definitive. And neither the World Trade Organisation (WTO) nor the EC have confirmed the document's legitimacy, although several senior industry figures have confirmed seeing it. The findings of the safeguard investigation should be published on the WTO website tomorrow.

Turkey's rebar imports into the EU averaged 273,506 t/y over 2015-17, the European Commission's investigation period. As such, the commission in its WTO notification has suggested duty free quotas of 117,231t from 2 February to 30 June; 301,537t from 1 July to 30 June 2020; and 316,614t from 1 July 2020 to 30 June 2021.

But Turkish imports into the EU surged by 137pc over the first 10 months of 2018 to 658,841t, compared to 278,357t over the same period of 2017.

Since Argus reported the notification on 28 December, some buyers have been booking tonnage as they are concerned about limited supply. One trader, who has booked material, said such a quota would be of "major concern", but a broker said buyers are not willing to take the risk until an official announcement is made.

If the quotas end up as proposed, the EC decision will adversely affect Turkish sales, a major mill said, adding that Turkey was the biggest supplier for Europe in 2018, while for Turkey, Europe was the second-largest market. With domestic Turkish demand weak and exporters facing competition from China in many other alternative markets, producers will have to evaluate their options in the coming weeks.

The EU safeguard is not designed to reduce fairly traded imports, rather to prevent a diversion of tonnes previously destined for the US, given its 25pc duty. Turkish volumes into the US have slumped, particularly since President Trump doubled the country's duty from 25pc to 50pc. And coil and rebar volumes into the EU have risen substantially since.

Still, Turkish mills bemoan the potential rebar quota amount, given that they can no longer sell into the US and could have volumes into the EU capped way below their existing levels. Turkey can take some of the "other countries" quota once it has exhausted its own, but only in the fourth quarter, according to the commission's WTO notification.

UK rebar buyers are particularly concerned about the potential quota level, should the definitive level be in line with the WTO notification.

"[The] Government should understand that this could severely affect supply of Cares-approved material destined for major infrastructure projects", one trader said.

Turkey is the major third-country Cares-approved supplier of rebar into the UK now, after China was dumped. The UK has one domestic rebar producer, Celsa, which also owns around 50pc of the downstream fabrication market. It is not clear whether the structure of the market will be an issue post-Brexit.