Rumors about the US adopting steel import quotas to replace Section 232 tariffs have picked up steam in the last week, with one Mexican official indicating a quota deal could be closed “within weeks” and the President and CEO of the AISI telling news media that the matter is currently being discussed at high levels of the US government.
However, the latest news and speculation point to a quota deal exclusively with Canada and Mexico now that negotiations for the revised NAFTA deal have concluded. Historically, Canada has never been a significant source of US import rebar, but Mexico was the second-largest source behind Turkey until an AD/CVD determination in late 2014 drove Mexican rebar out of the US market. After revisions to the AD/CVD order a few years later re-opened the US import rebar market to Mexican producers, Mexican rebar has slowly regained its presence in the US, although sources tell SteelOrbis that Mexican producers are “extremely cautious” about their offering prices to avoid another AD/CVD case. In the event that the 25 percent Section 232 tariff was eliminated, sources say Mexican rebar offers would strive to maintain a “slight margin” below US domestic prices. However, if a quota deal with Mexico resembled an existing deal with Brazil and limited exports to an average of the last three years’ tonnage levels, the low numbers compared to pre-AD/CVD effective years would mean very few tons allowed into the US, which might be “worse than tariffs” according to one source.
Either way, if the speculated quota deal is for North American trading partners only and continues to exclude the EU, import rebar prices to the US are expected to maintain stability. Currently, offer prices are unchanged this week. Import rebar offers in the US market from Italy and Spain are still around $38.50-$39.50 cwt. ($849-$871/mt or $770-$790/nt) DDP loaded truck at US Gulf ports, while prices for currently available inventory at the ports from the same countries remain around $36.00-$37.00 cwt. ($794-$816/mt or $720-$740/nt) DDP loaded truck in the Gulf, and about $1.00 cwt. ($22/mt or $20/nt) higher on the East coast.