Salzgitter forecasts strip business sales to move up in 2018 on safeguard case

German steelmaker Salzgitter expects that its strip business unit will achieve higher sales in 2018 supported by the European Commission’s safeguard case, the company said on Monday August 13.

There has been a decline in low-priced imports of flat steel from China into Europe due to the trade defence measures now in place. The volumes from China, however were partially replaced by material from Turkey, India and South Korea.

For example, the European Commission (EC) imposed definitive anti-dumping duties at rates of 18.1-35.9% on hot rolled coil (HRC) imported from China in April 2017.

As a result, Chinese HRC exports to the EU dropped 78% year on year to 265,000 tonnes in 2017. While imports of similar material from Turkey, India and South Korea jumped 77.2% year on year to about 3.6 million tonnes last year.

Imports increased “because of the first redirection effects resulting from US anti-dumping duties. The market environment, therefore; remains sensitive,” Salzgitter said.

The EC set preliminary measures in a safeguard case on July 18, in the form of tariff rate quotas on 23 product categories, based on average import volumes over the past three years. Imports will only face a 25% tariff if the quota is exceeded.

The provisional measures can remain in place for a maximum of 200 days, and a definitive decision in the case will be made by early 2019 at the latest.

“At present, however, the economic position of the strip steel business unit is very positive. Assuming that demand remains robust, flanked by EU safeguard measures, we anticipate sales that are significantly higher compared with the year-earlier figure,” the company said.

Salzgitter strip business reported a 14.5% year-on-year increase in its sales to €633.3 ($722.3) million in the second quarter of 2018, supported by higher prices in Europe.

Metal Bulletin’s price assessment for domestic HRC in Northern Europe averaged €569.04 per tonne ex-works in April-June 2018, compared with €530.19 per tonne in the same three months of 2017. Prices moved up on good demand and the effects from trade defense cases.

The unit’s shipments moved up 10% year on year to 1.21 million in April-June of 2018.

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