Assofermet, the Italian association of local steel and scrap distributors, has sent a letter to the EU Commission this week regarding the review of the safeguard measures on imports of certain steel products and the impact of the Covid-19 emergency on the steel market. According to Assofermet, steel demand "has been completely frozen while steel mills, despite some slowdowns, have continued to produce steel," as during the lockdown period they "have been permitted to continue to produce".
The association underlined that in the past days several documents have been submitted to the European institutions to ask for further restrictions within the scope of the current safeguard system, "with a distorted assumption that closing the EU steel market would be beneficial for the EU industry". All these assumptions can be proven to be false, said Assofermet. First, "the alleged threat of Chinese steel is totally disarmed by the wide system of antidumping duties in place". Additionally, Assofermet explained that steel imports arriving in the EU market have steadily decreased over the last 15 months" (in the first quarter of 2020 they decreased by 28 percent year on year), adding that there is no correlation between the imported volumes and the dynamic of prices as prices have been higher when import volumes were higher and vice versa. Also, the association said that the quarterly quota system distorts the import flows into the EU, creating sudden peaks of volumes cleared, with a subsequent reduction in the following two months. Any revision of the safeguard system would be unfairly penalizing for European distributors and consumers that hold contracts duly signed in good faith for delivery up to September 2020, the Italian steel distributors association stated, adding that actions that impact on demand are required instead of actions aiming at reducing supply. In this regard, Assofermet suggested that EU efforts should be focused on supporting EU steel demand by a wide infrastructure plan, an income support plan, and keeping a reactive and flexible business environment.
Regarding the case of Turkish HRC, Assofermet recalled that Turkey is by far the most important country of origin for HRC imports into Europe (2.8 million mt out of a total of 7.2 million mt), but said that "European mills are systematically attacking the Turkish market by exporting HRC into the Turkish market at prices that are much lower than the prices at which Turkish mills export into the EU". Moreover, "European mills systematically under-price the European market". According to the Italian association, the European market is already overprotected and therefore any action against HRC imports from Turkey would keep European domestic prices artificially higher, hugely benefitting the European mills "at the expense of European consumers and undermining the competitiveness of the EU steel consuming sectors".
In conclusion, Assofermet said that EUROFER's requests have to be rejected and that the 30 percent cap should remain unchanged, as so far it has proven to be effective in avoiding concentrations of flows from single countries. Moreover, "the quarterly allocation of the quotas should be eliminated, with beneficial effects for both producers and consumers of steel", while "the relaxation mechanism could be reviewed, according to the proposal of ESTA, by substituting the yearly increase in the tariff-rate quotas with a reduction of the tariff from 25 percent to 20 percent".