Steel products trade case started ‘to protect Russia from Ukrainian imports’

A safeguard investigation begun by the Eurasian Economic Commission (EEC) was started primarily to protect the Russian market from imports originating in Ukraine, market sources have told Metal Bulletin.

The EEC started a safeguard case investigating imported hot-rolled (HR), cold-rolled (CR) and coated flat steel on August 7. This was to prevent the redirection of imports from the United States and the European Union, which imposed measures to protect their markets earlier this year, and from Turkey, where a separate safeguard investigation is under way.

“The main aim of the investigation is to protect the Russian market from Ukrainian imports, because traditionally the price for such material is lower,” one large trader told Metal Bulletin. The Russian market is the largest steel consumer in the Eurasian Economic Union (EAEU).

Metal Bulletin’s weekly price assessment for Russia-origin 4mm HR sheet on Monday August 20 went up to 44,600-46,600 roubles ($664-694) per tonne cpt Moscow, including 18% VAT.

Metinvest is the only flat steel products exporter from Ukraine at the moment.

In 2017, Russia imported around 322,000 tonnes of HR flat steel, up by 64% from 197,000 tonnes in 2016, according to data from the International Steel Statistics Bureau (ISSB).

This surge in imports was mainly caused by increased shipments from Kazakhstan. Last year, Kazakhstan more than doubled its HR flat steel shipments to Russia to 233,750 tonnes,. In 2016, the total had been 113,540 tonnes.

Meanwhile Ukraine kept its HR steel flat imports to Russia almost unchanged at 86,912 tonnes in 2017, compared with 81,128 tonnes in 2016.

“Kazakhstan is the largest supplier of [steel product] imports [to Russia], but we can’t apply trade measures against the country because it is a member of the [EAEU],” another trader said.

As well as Russia and Kazakhstan, the EAEU includes Belarus, Armenia and Kyrgyzstan.

But even though Kazakhstan is part of the trade union, Russia started a countervailing investigation into HR, CR and coated flat steel products from the country late in December 2017.

Kazakhstan’s steel producers – in fact, ArcelorMittal Temirtau is the only flat steel producer there – were supposed to pay compensation but no duties or quotas were imposed.

CR flat steel imports into Russia increased by 34% to 367,552 tonnes in 2017, compared with 273,714 tonnes in 2016, according to ISSB.

This growth was also mainly a result of higher shipments from Kazakhstan, which increased its CR flat steel products supply by 45% to 173,436 tonnes in 2017, compared with 119,568 tonnes a year before.

Ukraine was the second-largest supplier, but it reduced its CR flat steel shipments by 16% to 86,543 tonnes in 2017, from 103,335 tonnes in 2016.

Russia’s imports of hot-dipped galvanized coil (HDG) went up by 19% in 2017 to 620,995 tonnes, from 522,500 tonnes a year before.

More than one-third of this volume was shipped from Kazakhstan. In 2017, HDG imports from this country increased by 77% to 226,622 tonnes, from 127,833 tonnes in 2016.

China and Ukraine were the second- and third-largest suppliers, respectively shipping 127,147 tonnes and 126,901 tonnes into Russia in 2017.

So far in 2018, imports of HR flat steel to Russia have continued to grow, while shipments of CR and coated flat steel have decreased.

In January-May, HR flat steel imports totaled 165,394 tonnes, up by 52% year-on-year from 108,573 tonnes.

Meanwhile, CR flat steel import volumes decreased to 140,000 tonnes during the first five months of 2018, compared with 170,328 tonnes in January-May 2017.

Over the same period, HDG imports declined to 236,665 tonnes, from 261,448 tonnes a year before.

In 2017, apparent steel consumption in Russia increased by 5.1% to 40.6 million tonnes, according to the World Steel Association (Worldsteel). In 2018, steel use is expected to reach 41.5 million tonnes.