Trade barriers continue to shake up EU steel ... - CRU Group



Trade barriers continue to shake up EU steel long products20 March 2017Region: Global, Topic:Prices, Market & Product: End Use (Cable Materials supply)Over the past couple years, trade cases have become an increasingly important factor in the dynamics of the global steel market, and the number of trade cases continues to grow. Recently, announcements were made regarding provisional anti-dumping duties on steel rebar imported from Belarus into the EU and from Turkey into the US. In the table below, we have summarised the key existing anti-dumping duties that are relevant to European producers and consumers of long products. This CRU Insight will review these trade cases, with particular attention to new developments in the past six months. As presented in the March edition of the Steel Long Products Market Outlook, trade cases both in and outside the EU will continue to shift European market dynamics through reduced import competition in the EU on the one hand, but narrowing export opportunities on the other.EU anti-dumping duties Recent developmentsEffective December 20, 2016, the European Commission imposed a provisional 12.5% anti-dumping duty on rebar from Belarus. In 2015, EU-28 rebar imports from Belarus increased 113% to 472 kt, then dropped back down to 289 kt in 2016 after this trade investigation was announced in December 2015. The average unit value of these imports (according to trade data) was $350 /t in 2016, down from $409 /t in 2015. The Belarusian Ruble (BYR) has depreciated significantly over the past year, which has helped support export competitiveness. If the BYR remains weak, we think that Belarus still has some scope to export into the EU, especially into very nearby countries such as Poland where delivery costs will be small. However, as the chart below illustrates, this 12.5% duty certainly erodes the competitiveness of Belarusian rebar, and in 2015 would have pushed Belarusian prices quite close to German domestic prices.The EU has also recently imposed provisional anti-dumping duties on imports of seamless pipe with a diameter greater than 406.4 mm from China. The duties came into effect on November 12, 2016 and range from 43.5-81.1%, signalling a very strong effort to keep out future imports of these products from China. Meanwhile, the EU has a longstanding case against several other seamless pipe products from China: duties ranging from 17.7% to 39.2% have been in place since October 2009 and were maintained in December 2015 after an expiry review. However, this case was reopened in September 2016 after a Chinese producer, Hubei Xinyegang Steel Co, won a case at the EU Court of Justice to have the measures repealed and past duties paid reimbursed. In light of this development, the European Commission is now reinvestigating this case with regards to all Chinese producers.Finally, duties on several seamless pipe products from Russia and Ukraine, which have been in place since June 2006, will expire on 5 July 2017 unless European Union producers submit a request for an expiry review.Other EU dutiesThe other key anti-dumping duties currently affecting EU long products markets are for rebar and wire rod from China. The wire rod duties range from 7.9% to 24% and have been in place since July 2009; import volumes have remained minimal since. In the case on rebar from China, provisional duties of 9.2-13.0% imposed on 20 January 2016 were increased to 18.4-22.5% when they were finalised on 29 July 2016. Import volumes of rebar decreased 85% y/y in 2016 to just 69 kt. Most of these volumes arrived in the final few months of the year, after the anti-dumping case had been finalised. We expect that China will remain largely cut out of the EU markets for rebar and wire rod as a result of these duties.Non-EU trade casesCases affecting TurkeyOn March 1, 2017, the US Department of Commerce announced preliminary anti-dumping measures on rebar from Taiwan, Japan and Turkey. Duties for Turkish producers range from 5.29% to 7.07%, which are minimal in comparison to the 209.46% duties imposed on Japanese producers. We expect Turkish producers to continue to be able to export to the US at these duty levels. Final duties will be announced on May 16, 2017. Meanwhile, on February 22, 2017, the Department of Commerce announced the determination of a 3.47% countervailing duty (CVD) on rebar from Turkish producer Habas; all other Turkish producers face a 1.25% CVD determined in a 2014 investigation from which Habas was exempt.Turkish producers now face anti-dumping investigations in Egypt also, covering both rebar and wire rod. China and Ukraine are also subject to these investigations. Turkish rebar exports to Egypt were 844 kt in 2016, which accounted for 12.5% of total rebar exports. Egypt has become an increasingly important market for Turkish exports in recent years: in 2012 the share of rebar exports sent to Egypt was just 5.4%.Cases affecting EU countriesThe Canadian Border Services Agency announced preliminary duties on rebar imports from six countries, including Portugal and Spain, which came into effect on January 3, 2017. Portuguese producer Megasa now faces a 2.2% duty, while Spanish producers Celsa Atlantic and Nervacero face 15.8% and 32.5% duties respectively. All other Spanish producers face a 109.2% duty. The other countries included in the investigation were Belarus, Hong Kong, Taiwan, and Japan, and duties on producers from these countries range from 1.0% to 109.2%.From January to November 2016, exports to Canada amounted to 6.3% of total Spanish rebar exports, up from 2.1% in 2015. The share of total Portuguese rebar exports sent to Canada was 3.1% in 2016, down from 18.75% in 2015 - exports dropped to zero from March 2016, likely due to the threat of trade action. Although Canada isn't a key export market for Spanish and Portuguese producers, the high volumes and export shares to Canada in recent years reflect the challenges these producers are having in external markets.A 2 million tonnes/year import quota on rebar in Algeria, imposed in 2016, has significantly narrowed opportunities for southern European producers. Algeria is the top destination for rebar exports from Spain, Italy, and Portugal. So far, Spanish producers have suffered the greatest loss of market share here: rebar exports to Algeria from Spain fell 24% y/y in 2016 for the January to November period, while Italian exports increased 11% y/y during this period. Portuguese rebar exports to Algeria increased 7.7% y/y in 2016, but remained 312 kt below the peak reached in 2014.Meanwhile, the Algerian government has yet to issue import licenses for the 2017 rebar quota, so 2017 Q1 has been a tough period for southern European exporters who have lacked access to their main export market. Competition within Europe has been intense as a result. The market expects that the Algerian government will issue import licenses very soon, although the case is far from transparent and market rumours abound. In any case, assuming the 2 Mt/year quota is maintained for 2017, narrowing export opportunities for southern European producers will continue to intensify competition in European markets.Contributor: Natalie Noor- Drugan, Publisher & Editor in Chief, Wire & Cable News ................
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