Market in turmoil over Turkey HRC AD case

The European hot-rolled coil market is increasingly anxious about the European Commission's anti-dumping case against Turkey, the outcome of which is expected in late December, as European steel association Eurofer and Turkey are hard at work lobbying.

Provisional measures could be put in place in mid-January, with the potential for retroactive duties causing havoc on the market, and speculation as to any potential duty, and whether the commission will accept Eurofer's request for registration.

Some market participants expect that if a duty is imposed it would be negligible at around 3-4pc, while others said that it would not be less than 10pc, at which level it would have an impact on the market. A 10pc duty would today mean just over $50/t. Others said thee will be no duty — Turkey has negotiated other HRC dumping cases very well, even in the US, where the administration typically acts more quickly and stringently than the commission.

Given the uncertainty, most buyers are not willing to risk purchasing from Turkey today, with the exception of several large players. But even the largest re-roller was heard to be withholding purchases from the country for the time being.

There is a lot of speculation about imports being registered, with the commission refusing to comment at this stage on its decision. It would need to publicly announce when it starts registering imports. The basic anti-dumping regulation says a definitive anti-dumping duty could be levied on imports that entered the market no more than 90 days before the application of a provisional measure, and among other requirements, the imports would need to have been registered.

All those uncertainties are stimulating activity from traders. In the past week rumours have proliferated of lower-priced Turkish material being offered into Europe. Large trading companies are taking short positions for January shipment cargoes and exerting pressure on mill prices. Other traders, probably expecting cargoes soon, are more bullish and emphasise the shortage of supply in Europe until at least the year-end.

In any case, Turkish mills are hesitant to lower offers, as for many buyers the discount to local European prices would need to be particularly significant to warrant the risk. Offers into Italy have been heard at €465-470/t cif, €15-20/t below offers from some other importers, and €10-30/t below ex-works prices from Italian sellers. But these levels are not leading to many sales, and as a buyer put it "none of them are disrupting the market".

Both Eurofer and the Turkish steel associations are lobbying the commission. Turkish mills are pushing hard against registrations of imports after Eurofer submitted a registration request last month. "We have already sent notice to the commission that these actions will definitely be challenged at WTO level as we already did regarding safegueard measures," Colakoglu chief executive and CIB board member Ugur Dalbeler said.

Some say considering the EU's push for a shortening of the supply chains of European business and more reliance on regional raw materials, it would be contradictory to impose further restrictions on the flow of goods on a country such as Turkey, considering how nearby it is and ingrained in many firms' business model. Its preponderance of electric-arc furnace based production also satisfies the increasing green criteria compared with carbon-intensive blast furnace production.

By Lora Stoyanova