EU HDG market contemplates safeguard loophole

There is talk in the European hot-dip galvanised (HDG) market about a potential loophole created by the European Commission's latest review of its definitive steel safeguard.

The review has placed some material previously categorised as automotive grade in the 4B quota into the 4A quota, to avoid diminishing the material available to carmakers. Non-auto galv from China had previously been sold into 4B, which European mills said was to circumvent the existing dumping duty on structural grades.

But the amendment means Chinese oiled material — not subject to the existing dumping duties on chemically passivated structural grades — could theoretically be cleared into 4A under CN code 7201490080 without duties being payable. Some traders suggest this is risky, but possible. Many have sought advice from their customs advisers in relation to the matter.

China does not have its own country quota for 4A, only 4B, but material can be cleared into the residual, or other countries, quota. The total for the other countries quota for the 1 July 2019-30 June 2020 period is 1.92mn t, with 454,485t currently still available to clear for the October-December 2019 period.

Some traders suggest the possibility means little at present, with Chinese galv not the cheapest in the world market. But it could see stocked galv potentially cleared through 4A without any duties being paid.

A European steelmaking executive called it a "big mistake" by the commission.