Indian mills may need to bring down prices for European buyers to make their exports viable and match competition.
“At current prices of $950-960/tonne FoB India, European buyers will not be interested much after paying 25% duty,” a source informed SteelMint.
Some small bookings may take place but Indian mills may have to bring down prices to make these viable for European buyers and match competition, the source indicated.
European buyers are holding material in customs bonded warehouses and planning to clear the same in the next quarters, to avoid paying the 25% duty in the aftermath of the European Commission (EC) recently extending its steel safeguard measures for another three years.
HRC volumes from India to the EU rose from 95,858 tonnes in Nov’21 to 214,839 tonnes in May’21, touching a peak of 358,086 tonnes in Mar’21. CRC exports increased from 7,605 tonnes to 95,568 tonnes within this same period, as per SteelMint data.
Current quota at 1.6 lakh tonnes
It may be recalled that the EC will extend its steel safeguard measures for another three years instead of the expected one-year period. The proposal includes a 3% increase in quota volumes, rather than 5%.
The current quarterly quota is approximately 1.60 lakh tonnes, and 3% of this would be around 5,000 tonnes. “That won’t make much of an impact at present. The HRC quota is already over for this calendar,” another source said.
Impact of US sanctions
The EU safeguards were applied by the EU post-the US 233 sanctions, to safeguard against diversions from those countries which were most affected by the US sanctions. The quota has increased over the years and is independent of the growth of the overall EU steel market.
The proposed EU quota extension will come into effect on 1 Jul’21 and consists of a tariff-rate quota (TRQ) available per product category, based on the average volume of traditional imports over 2015-17, plus 5%. Only once the quota is exceeded, does a 25% tariff apply to imported products, with major traditional steel importers retaining their own country-specific quotas. The 25% duty is on the buyer’s account.
The main exporting countries are Turkey, Russian Federation, India, Korea and Ukraine.
Mid-term outlook
Exports from India to Europe are likely to be slow in second quarter (Q2) as Aug –Sept is the holiday season here. The Chinese have anti-dumping duties of around 20-40%, but which vary across mills. Also, the rainy season and internal commodity investigations are slowing imports into China and hence Indian mills may not be able to get an alternate market here going into Q2.
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