EU restores net HRC trade surplus with Turkey

The European Union has had a hot-rolled coil (HRC) net trade surplus with Turkey since November of last year, when it became clear dumping duties would be imposed on material from the country.

Over January-July this year, the EU had a net trade surplus of 727,576t with Turkey, sending 1.56mn t and receiving just 832,960t in return.

European mills are now trying to quietly push tonnes into export markets to avoid lower-priced domestic spot sales that weigh on index levels, which would make for more protracted automotive talks.

In recent days, European mills have offered into Turkey substantially below domestic prices, albeit at levels that are too high for Turkish buyers to entertain. Two large EU producers have been offering around $950-970/t (€809-826/t) cfr to offload surplus tonnages caused by lower automotive production, while a third producer reportedly sold 30,000t of pickled and oiled coil into Turkey in the last week, although this has not been confirmed. It is only those spot-focused producers, such as Visegrad mills, without much automotive exposure that are happy to cannibalise domestic spot prices to make sales at present.

Deals around €950-970/t delivered Ruhr have been reported by Visegrad mills as well as buy-side sources, whereas larger north European mills will not admit to sales below €1,100/t at present — this is the level they are trying to achieve with automakers for 2022 annual contracts, but the talks have not concluded, with automakers seeing the downside building in the spot market.

Last year the EU had a net trade deficit of 253,500t with Turkey, down from 965,198t in 2019 and 1.75mn t in 2018.

Russia has been the largest seller of HRC into the EU this year, unsurprisingly given its significantly higher quota compared to other regions. It has sold 1.37mn t into the EU, much of which is likely to have come from Severstal with its €17.60/t duty. The European Commission is in the process of reviewing the duty, after lobbying by European steel association Eurofer, as first reported by Argus. In May last year, lawyers acting on behalf of Eurofer sent an email to members suggesting there was a chance of tripling Severstal's duty, or even more. In January, the EC began a review into the case, and the results are expected later this year or early next.

Leading European steelmaker ArcelorMittal has a joint venture in Turkey, Borcelik, which produces pickled, cold-rolled and galvanised coil, using HRC as its substrate.

By Colin Richardson