Bountiful tonnage left in EU steel strip quota

Less than 100,000t of the EU's preliminary hot-rolled sheet and strip quota has been used so far, according to European Commission data.

The quota, in place from 19 July this year until 3 February 2019, is set at 4.269mn t, and 4.171mn t was left as of 8 August. There was a "blocking period" between 19 July and 1 August, where no allocation was made, to allow EU member states to implement the measures.

The allocation process typically takes two working days after the claims are submitted, according to UK government tax department HMRC. The quotas are allocated in claim date order.

There is another 17,527t waiting to be allocated, according to the commission, meaning around 4.153mn t is still available to be imported tariff free before February. Anything above the quota incurs a 25pc tariff.

The EU imported an average of 7.3873mn t/yr of hot-rolled wide strip from third countries over 2015-17, according to Eurostat data. This excludes the 1,090t imported from Iceland, Norway and Lichtenstein over the period, as they are exempt from the tariffs.

After talk of an initial flurry of import activity when the safeguard was announced, activity has eased, partly because of worries over how full the quota might be and how it will be administered.

There are also discussions that some shipments are being delayed as customs authorities throughout Europe get used to the measures.

Turkish and north African material has lately been sold at aggressive pricing into Italy and Greece. But import appetite is generally low, particularly into the Benelux region, with a large portion of the market away for summer holidays.

Uncertainty about future direction is also crimping import buying, with many market participants questioning whether steel mills will get their targeted increases for the fourth quarter.

Some buyers are trying to spin a bearish narrative, citing delayed automotive production and quiet activity. But import penetration is fairly low and fundamentals look solid enough, with consumer activity in steel consuming sectors to outstrip EU GDP growth this year and next.