Eurocommisson`s bearish game

The market and we also had inflated expectations from tightening the Safeguard system. After the draft of the amendments was released, we could assume that the Commission would use other instruments to protect the market, such as anti-dumping duties. This could be logical, given the subjectivity and closed nature of AD investigations, where officials have more influence on the outcome. But based on the provisional results of the investigation against HRC imports, we saw that the Commission has a soft approach here too)

European Commission officials had arguments for stronger import restrictions:

1. The quota volume for HRC was reduced by 12.1%, CRC by 1.3%, plate by 3.5%. We expected a 25% reduction in quotas based on the elimination of liberalization. The logic of liberalization was initially to adapt import volumes to a growing market. And the liberalization rate was adopted at 5% as the historical growth rate of the market. But in fact, the apparent steel consumption in the EU in 2019-2024 fell by 10%, with an accumulated increase in quotas by 25%. Therefore, a 25% reduction would be justified.

2. The caps on quotas of other countries were cut for HRC from 15% to 13%, set for CRC – 13%, HDGC 4A – 20%, HDGC 4B – 25%, plate – 20%. Reduction of the cap for HRC will have a less impact on the market than higher than expected caps for HDGC and plate. We expected that the Commission could set 15% caps for all product groups. The rates values are very subjective, there are no transparent justification for them, but the decision could be made based on the precedent of 15% for HRC.

However, changes in safeguards can reduce imports by 25% y/y, which is very serious and will increase the utilization of local steelmakers.

But the results of anti-dumping will not have a significant impact on the market. Provisional results of the anti-dumping investigation against HRC imports:
• Green light for 300,000 tons per quarter of HRC imports from India
• Maintaining the possibility of imports from Vietnam, Japan and Egypt.

Market rumors, that have been circulating for more than six months, suggest that other AD investigations may be underway:
• Import of HRC from Taiwan
• Import of HDG from Vietnam
• Plate import from Korea and Indonesia.