MB STAINLESS HELSINKI: EU flat stainless prices ‘to stabilize’ once import quota is filled

European domestic stainless steel prices are likely to stabilize as the EU safeguard quota for stainless steel imports is taken up, according to Roeland Baan, ceo of Finnish stainless steelmaker Outokumpu.

Speaking at the Metal Bulletin and Steel & Metals Market Research (SMR) stainless steel conference in Helsinki, Finland on Tuesday September 18, Baan was referring to the quotas introduced by the European Commission in July.

To block materials redirected from the US after its imposition of Section 232 import tariffs on steel, the European Commission imposed preliminary safeguard measures in the form of a Tariff Rate Quota (TRQ) for imports of 23 steel product types on July 19. Tariffs of 25% will only be imposed once the individual product quotas are filled.

Around 52,065 tonnes or 10.93% of the EU safeguard quota for cold-rolled stainless steel sheets and strips had been filled as of Tuesday September 18, according to the EU tariff quota consultation database. The quota total for this product type is 476,161 tonnes.

Around 4,865 tonnes are waiting to be allocated to the quota.

“Until now, the effect [of the safeguard] has been zero [because] material already on the water was exempt on arrival [in Europe],” Baan said.

Import delivery times from Asia are around two to three months, so the impact on the percentage of the quota filled will be much stronger in the coming months, one market participant said on the conference sidelines.

“The market share of stainless steel imports in Europe has risen recently to around one-third, up from 26%, and we have seen pricing drop [by] between 20% and 25%,” Baan said.

Metal Bulletin’s weekly domestic base price assessment for 2mm, grade-304 cold-rolled (CR) stainless steel sheet in Northern Europe was €970-1,020 ($1,131-1,189) per tonne delivered on Friday September 14, down sharply from €1,060-1,130 per tonne at the beginning of 2018.

Grade-304 CR sheet has been offered in recent weeks from stock at transaction prices around €2,300-2,350 per tonne delivered, compared with €2,473-2,543 per tonne when combining the base price with September’s alloy surcharge.

Imports of flat stainless products continued to increase in the first half of 2018, rising by 12.5% to reach a market share of 29%, up from 26% in the first half of 2017, Spain-based stainless steel producer Acerinox said on August 2.

“We should see a significant drop in the market share of imports, down to 22-23%, compared with around one-third now [once the quota is filled],” Baan said.

“At that point, the import price will also be around €500 per tonne more expensive [because of the 25% duty],” he added.

The EU safeguard measures are unlikely to be lifted if the US decides to remove the 25% duty on steel imports of EU-origin, because “the reasoning for the safeguard was to block [steel redirected] from the US, which will still happen for volumes from other countries affected by the Section 232 duties,” Baan said.

Baan added that he hoped to see final EU safeguard measures announced in November.