European Commission to probe stainless steel imports

The European Commission initiate an anti-subsidy investigation into hot-rolled stainless steel coils from China and Indonesia.

The probe is part of an ongoing anti-dumping investigation. The EU implemented a definitive safeguard measure in February and began a review of the measure in May.

Under the existing definitive safeguard measure on steel, which will be in effect for three years, a 25pc duty will be applied for imports above product-specific quotas. But stainless steel imports from China and Indonesia were excluded from this safeguard measure and no import duty is imposed on them.

However, many market participants said the existing safeguard was not effective against cheaper imports from China and Indonesia, which continued to flood the European market. Mills and trade associations have lobbied for an investigation, and import tariffs on Chinese and Indonesian products, to protect their domestic market.

Chinese stainless steel mills operating in China and Indonesia primarily use nickel pig iron (NPI) for their feedstock. European mills use stainless steel scrap as their main feedstock for production.

Commonly used stainless steel 304 series contains 8pc nickel and 18pc chrome.

But NPI is significantly cheaper than other raw materials, giving Chinese stainless steel mills an unfair cost advantage over European mills.

This has cut European stainless steel mills' sales in Europe as they struggle to compete with cheaper imports.

Imports of stainless steel hot-rolled and cold-rolled coils — with harmonised tariff codes 7219 and 7220 — from China increased to 61,835t between January and August this year, up by 12.8pc from the same period last year, according to trade data.

Imports from Indonesia nearly doubled year on year to 2,628t in the first eight months of 2019, a surge of 82pc from 1,444t in January-August 2018.

To compete with Chinese and Indonesian imports, European stainless mills are negotiating for bigger discounts for nickel content in 304 stainless steel scrap. Payables for the nickel content in stainless steel scrap in the fourth quarter are expected to be lower than 60pc of the nickel contract traded on the London Metal Exchange.