Steel safeguard review could aid buyers

The European Commission's initial safeguard review is likely to be more favourable to importers and consumers, industry sources suggest.

The review is likely to focus on hot-dip galvanised, electrical sheet, wire rod and tinplate — products that spurred the most heated discussions before the measures were implemented.

The quotas for these products are tight. February-March wire rod quotas for Turkey and other countries were exhausted quickly, while the auto-hot dip galvanised quota (4B) is full for China — the largest country by volume — as is the residual quota.

The commission will try not to set precedents for other products not to be reviewed, as this would be too cumbersome, complex and bureaucratic, given the amount of interested parties. The review will have to be more focused in scope, although buyers and importers are likely to petition for rebar's inclusion. The Turkey rebar quota for February-March was full within days and the other countries' quota from 1 April is likely to fill up too as Turkish material that has been sat at port is cleared into it.

Traders suggest rebar could be around 30pc oversubscribed.

The auto-HDG quota could be filled several times over, although traders are likely to withhold material to avoid duties.

The UK's exit from the EU could trigger another review of the safeguard measure, should the UK leave without a deal. In that event, the UK would have to have its own quota based on historical shipments — a big blow for UK mills, especially given the competitive advantage they could enjoy from a weaker sterling. The safeguard would also have to be tightened to reflect the fact it is for 27 member states, minus the UK.

The UK could well implement its own safeguard for products made in the UK in the event of a no-deal Brexit. If there is a customs union, the EU safeguard will still apply while the transition period is in play, giving the UK time to implement its own measures.

UK Steel, which represents UK steelmakers, has long called for a safeguard along EU lines, should there be a no-deal Brexit. The safeguard quota levels would reflect UK import levels.