Price undertaking discussions for HRC imports to EU

Price undertaking discussions for HRC imports to EU

Latest developments on the EU front with regard to the new anti-dumping duty proceedings on hot rolled coil imports point out to bilateral negotiations of the related countries with the EU for price undertaking agreements. SteelOrbis understands that Turkish flat producer Erdemir is also among the companies holding discussions for special price undertakings. As per the basic structure of the agreement, Erdemir will have to carry out each of its exports into the EU against direct letters of credit. Under such circumstances, the traders will not be in a position to open L/Cs unless they custom clear the material in cargo destinations. Furthermore, the agreement places a floor price for export of this material into the EU. Any sale of HRC into the EU under this specified floor price will not be possible. For the Turkish producer Erdemir, this floor price is determined on an FOB St Eregli port net effective basis (base+extras). SteelOrbis understands that floor prices for other countries involved are discussed on CFR basis. There is also another price set, which is called the minimum price that is again on FOB net effective basis for Erdemir and CFR for mills of other countries. In case the sales price is within the range of floor price and the minimum price, the mills will be allowed to sell the material at a certain specified quantity. However, that specified quantity should not be exceeded. If the sales of HRC are effected at a price level above the minimum price, then no quantity restriction will be applied. On the other hand, comments have been made to SteelOrbis that even the minimum price is found pretty high as far as current market conditions are concerned.