The UK government on Thursday published the long-awaited update to its steel safeguard quotas, setting the overall quota volume at 3.218mn t — 21pc higher than provisional volumes published in March. The cut compared with the previous safeguard regime has been softened to 51pc, from 60pc in an earlier proposal.
The biggest changes are to flat products, while some quotas, such as for rebar, are unchanged from their provisional volumes. The overall quota for hot-rolled coil (HRC) has been lifted sharply, while the quota for importing hot-dipped galvanised (HDG) from the EU has been reduced significantly. In contrast, quotas for South Korean and Vietnamese HDG are unchanged.
"We recognise that this will create changes to trade flows including with some of our closest trading partners... Where quotas are filled, imports above these levels will face a 50pc tariff. The measure will apply only to products that can be made in the UK," trade minister Chris Bryant said.
The EU HRC quota (category 1) has been revised up to 375,000 t/yr from the provisional 68,226 t/yr for the quota year beginning on 1 July. The Indian quota has been raised to 33,456 t/yr from 12,405 t/yr, while the South Korean quota has increased to 8,785 t/yr from 3,258 t/yr.
The UK government has worked closely with the EU to reflect the two sides' integrated supply chains, Bryant said. "We have... agreed an approach that reflects the UK and EU's highly interconnected supply chains. This will provide stability for UK-EU steel trade from 1 July, while we continue to work together to strengthen UK-EU steel trade longer term," he said.
Market participants questioned whether the South Korean HRC allocation would be commercially viable, given it allows shipments of only around 2,196 t/quarter.
Compared with the expiring safeguard year, a key change on HRC is that Turkey and Taiwan have lost their country-specific quotas, with those volumes folded into the residual allocation. But the residual HRC quota has been raised sharply to 49,763 t/yr from the provisional 18,452 t/yr.
But the overall HRC quota remains much tighter than under the current safeguard year, which market participants expect could support UK HRC prices. Prices for UK HRC were assessed last week at £715/t ddp Midlands.
In HDG (category 4), the EU quota was reduced from the provisional 634,773 t/yr to 510,273 t/yr. But annual quotas for India, South Korea and Vietnam were left unchanged at 125,796t, 100,753t and 174,367t, respectively.
Some market participants said the scale of Vietnamese HDG volumes allowed into the UK could weigh on prices.
Indian-owned Tata Steel UK said the final quota levels do not reflect UK market conditions and still leave key segments — including metallic coated steel, packaging steel and hollow sections — exposed to import pressure. The company warned that this could undermine the competitiveness, sustainability, growth and investment outlook of the UK steel sector, and called on the government to revisit the framework while continuing to work with domestic producers.
The government has also removed some product codes "where new information confirmed there was no UK production" and added others "where there is evidence of production", Bryant said.
In category 12A (alloy merchant bars and light sections), code 72283070 has been added. In category 12B (non-alloy merchant bars and light sections), code 72149950 has been added.
In category 14 (stainless bars and light sections), codes 72221910 and 72221990 have been removed.
In category 26 (other welded tubes), codes 73061100 and 73062100 have been removed.
In category 28 (non-alloy wire), codes 72173049 and 72173090 have been added, while codes 72172010, 72172030, 72172050, 72172090, 72179020, 72179050 and 72179090 have been removed.
Beyond HRC and HDG, the biggest revisions to the UK's provisional annual quotas are as follows:
- category 6 (tin mill products): +58,000t to 69,795t (+491.7pc)
- category 12B (non-alloy merchant bars and light sections): +64,102t to 70,812t (+955.3pc)
- category 17 (angles, shapes and sections of iron or non-alloy steel): +147,572t to 270,762t (+119.8pc)
- category 28 (non-alloy wire): -20,491t to 59,734t (-25.5pc)
