This protectionist trend saw the European Commission (EC) start a safeguard investigation into imports of 26 steel products on March 26.
This had the intention of shielding the region’s steel industries from the effects of a possible surge in import volumes after the United States introduced protectionist import tariffs on steel products from several countries on March 23, under its Section 232 trade legislation.
“Whatever the tightness in supply and demand may be, we’ve got other outlets for our products,” Sims said at the Wire 2018 trade fair in Dusseldorf, Germany.
“We have a customer base all over the world, and the benefit of being an international supplier with a footprint and a network of customers is that, when you need to move relatively small volumes to different geographic regions, you can do so without much disruption,” Sims said.
In October 2017, the US Department of Commerce imposed a preliminary dumping rate of 41.96% on carbon and alloy steel wire rod imports from British Steel, and all other UK producers.
“Our export volumes and activities in wire rod to the US are relatively small in overall percentage terms so, at the moment, we don’t see [this measure] as an issue for us,” Sims said.
British Steel exports the majority of its steel production, with Europe a strong target market for exports.
“We’d like to see stronger manufacturing growth in the UK and we’re poised and available for supply, but that depends on the health of the manufacturing base in the UK. However, we have vital customers abroad and an international strategy,” Sims said.
“At the moment, the European market is strong. Particularly, there has been growth in the automotive sector in recent months and years, and we’ll continue to seek opportunities where we can find them. You’ve seen that in the FNSteel acquisition,” Sims said.
British Steel acquired Dutch wire rod processor FNSteel, which has capacity for 250,000 tonnes per year, on October 31, 2017.
“It’s an exciting proposition. It’s a complementary business, which has downstream processing activities, and it has products approved for sale into customer markets that British Steel didn’t,” Sims said.
“There is a small overlap in terms of products but not a very big one, because FNSteel produces different grades, dimensions and sizes,” he added.
The acquisition of FNSteel could also bring additional benefits amid the continuing trade and regulatory uncertainty around the UK’s decision to leave the EU (“Brexit”).
“I don’t think the business proposition for FNSteel was based on [having greater flexibility amid Brexit with an EU-based facility] but, if it did have some Brexit opportunities [at some time in the future], that’s fair enough!” Sims said.
“Brexit has a load of uncertainties for us all, so FNSteel will give us some greater flexibility. But that’s perhaps a by-product of the business growth strategy, really,” Sims added.
Market outlook
“We have a customer base and a forward-order arrangement which is strong, so we’re looking for a good 2018,” Sims said.
“Generally, [wire rod] demand is strong and that inevitably leads to a situation where the supply constraints are reasonably tight across the industry. That will inevitably allow people to move [on prices] where they can,” Sims added.
European mills are raising their offer prices for higher-grade wire rod products by €30-50 ($36-61) per tonne for the second quarter of 2018, market participants told Metal Bulletin.
Sims declined to comment on whether British Steel would look to further increase wire rod prices.
The company previously announced price increases of £50 ($70) per tonne on both steel sections and wire rod for all deliveries from January 2018.
