Steelmakers are concerned that the European Commission might suspend duties on some steel products.

 

European mills now fear the commission may follow suit with other products that have been in short supply domestically, potentially including steel. The snapback of demand around the third quarter of last year, combined with reduced import arrivals and domestic production, pushed steel prices and margins to record highs.

 

During the commission's review of its safeguard, end users and importers argued that the measures should be relaxed to ease the shortage of steel in the marketplace. Mills baulked at this idea, suggesting the shortage was driven by the Covid-19 pandemic and not the quotas.

 

Shortages of parts and components have weighed on activity in Europe's construction and manufacturing sectors in recent months. Indices for construction activity have fallen below 50 in recent months, indicating contraction in the sector, driven by raw material shortages.

 

Russia imposed an export tariff on steel products from 1 August to ensure sufficient domestic supply amid rising costs. Domestic demand has sagged since the tax was implemented, with Russian steelmakers now perhaps the most aggressive in the world market on export prices. Hungary has also started monitoring exports, with producers needing to request permission to sell critical raw materials abroad.

 

The talk about a relaxation of duties has come at a peculiar time, with availability easing in the steel market and prices starting to slip. Argus' daily benchmark northwest EU hot-rolled coil (HRC) index was €1,098/t yesterday, down from over €1,200/t on 22 June.

 

While availability of hot-dip galvanised, cold-rolled coil and especially dry HRC has eased, there are still issues with pickled and oiled material.

 

Source: Argusmetals