EU HRC: Import quota set to fill before deadline

The European Commission's first hot-rolled coil (HRC) safeguard import quota of 1.3mn t, for 2 February-31 March, will be exhausted before the deadline should imports continue at their current pace.

Between 18 February and 12 March, 555,361t of material cleared into the quota, at a daily rate of over 24,000t, including weekends. After subtracting the ~114,400t still to be allocated from the 447,146t of the quota remaining, there is a net balance of 333,146t. At a drawdown rate of over 24,000t/day, in line with usage between 18 February and 12 March, another ~386,300t could be imported by the end of this month.

This would leave around 50,000t that will likely be cleared into the next 2.05mn t quota period starting on 1 April.

The daily quota drawdown rate so far exceeds the average import rate of 21,859t/day over 2018, and is substantially above 2017's 18,345t/day import rate. One European mill source said this was unsurprising, saying the quota was filling up as expected in line with time use.

But strong import arrivals so far this year are capping prices, particularly in the north, despite fresh import offers not being hugely attractive compared to domestic material. There is sufficient stock on the ground and European material may be the most competitive at present, with lead times also much shorter than for imported tonnages. Imports would likely arrive around late May/June, while certain European mills still have some April rollings available.

The spectre of softer import pricing is nevertheless weighing on expectations, particularly in the south, after one Turkish mill sold big tonnages at competitive levels to tube makers and an automotive sub-supplier.

The discount for Italian HRC compared to northwest material nudged up by €1/t again today, to €29.50/t, as Argus' daily northwest European HRC index moved up by the same amount to €508.50/t ex-works.