Turkish longs hit hardest by EU safeguards

Import data for February-July last year show that proposed definitive EU safeguard quotas will be more restrictive for Turkish rebar and wire rod, while the allowance for hot-rolled coil (HRC) and cold-rolled coil (CRC) will be more than adequate.

Market participants have largely shrugged at the allocated volumes for flat products, which for the 2 February-30 June 2019 period will be 3.36mn t, the equivalent of 22,547 t/d. Over the same period in 2018, average imports of HRC were only 18,332 t/d, before rising in the second half of the year to average 22,445 t/d in January-October.

There is still nearly 30pc left of the preliminary quota for HRC, and over 40pc for CRC, while the allocations for rebar and wire rod were exhausted at the end of 2018.

The EU has allocated 117,232t for the first period to Turkish rebar, equivalent to 787 t/d — significantly lower than the 1,961 t/d imported in February-July and 2,167 t/d in January-October.

At the same time, the quota allows 1,462 t/d to be imported from other countries — meaning all exporters except Turkey, Russia, Ukraine, Bosnia-Herzegovina and Moldova, which compares with 1,058 t/d imported from other countries in February-July 2018.

That said, there are only two other rebar exporting countries with a significant interest in Europe — Belarus and Norway. Norway is exempt from the safeguard measures.

Belarus has faced a 10.6pc anti-dumping duty in the EU since June 2017, despite which it has continued to sell, supplying 137,913t in the first 10 months of 2018.

While this is significantly lower than the amount Turkey supplied, industry data show Belarus could increase exports to the EU if it can get a premium price, as in 2018 it exported large amounts to the CIS, Israel and other destinations. But with the exception of the UK, Belarus has targeted different markets within the EU, which is why there is likely to be some residual amount left in the "other countries" quota from 1 April, when it becomes available to Turkey and all other exporters with allocated volumes.

The situation for wire rod is similar for Turkey, with average daily imports in February-July 2018 at 2,360t compared with a quota allocation of 814 t/d in the period until 1 July 2019. Even if Turkey gets access to the entire "other countries" quota for wire rod, which averages 819 t/d, this would not come close to the volume the country sold to the EU in 2018. In addition, there is a higher number of countries exporting wire rod to Europe compared with rebar, with Norway, South Korea, Japan, Bosnia-Herzegovina and Brazil all having sold some wire rod there in 2018.