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TEMPORARY SAFEGUARD MEASURES UNSETTLE EU STEEL MARKET

TEMPORARY SAFEGUARD MEASURES UNSETTLE EU STEEL MARKET
Issue Time:2018-08-13

European buyers of strip mill products were purchasing cautiously, in July, due to the uncertainty linked to trade disputes, political upheaval in several countries and proposed mergers within the industry itself. They were also waiting for clarification regarding the European Commission’s safeguarding investigation. The probe is aimed at preventing steel shipments being redirected to the EU market, as a result of the United States’ imposition of import tariffs under Section 232.

On July 18, the EC announced that provisional safeguard measures will be implemented, covering twenty-three steel product categories. A 25 percent tariff will be imposed above a set quota, based on the average import volumes over the past three years.

During July, a degree of price divergence, between the north and south of Europe, was noted. In Italy, local mills successfully reversed the recent negative price trend. In the remainder of the region, basis values remained stable, with slight negative pressure, as steelmakers accepted a rollover, or marginally lower figures, for September deliveries. However, the producers are pushing strongly for a fourth quarter price hike. MEPS noted some initial resistance to this initiative, particularly from service centres, due to their inability to fully pass on previous increases, to their customers.

Nevertheless, the lack of competitively priced third country imports, plus relatively strong underlying demand in most countries, should put regional mills in a strong position. A price recovery is expected to be accepted during negotiations in late July. At that time, customers will need to book tonnages, in order to replenish stocks after the summer vacation.

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