The European Commission recently completed its review of the safeguard measures, which were introduced to prevent the redirection of material previously destined for the United States. The Commission has recommended changes, to the list of products from developing nations, that are currently excluded from the quota system. It has made the proposed amendments based on the latest full year’s import statistics, instead of the ones used in the previous definitive measures.
Brazil and India were removed from the list for stainless steel hot rolled sheets and strip. These countries will become exempt from the quotas for this product. Turkey has obtained an exemption from the safeguard measures for stainless steel hot rolled quarto plates. This could result in increased imports, into the EU, from these countries.
In the proposal, Indonesia will lose its developing nation exclusion for both stainless steel hot and cold rolled sheets and strip. Imports, in these categories, will be subject to the quota and tariff system. Tonnages, from this country, have been arriving in the EU at a growing rate, since mid-2018.
Hot rolled stainless steel, from Indonesia, increased to over 25 percent of the total imports into the EU, in the first quarter of 2019. China still accounts for more than half of the foreign sales into Europe. The safeguard measures have done little to stop the rise in stainless steel imports, from all countries, since they were introduced in July 2018.
The volume of Indonesian cold rolled stainless steel, arriving into the EU, increased to approximately 8 percent of total imports, in the first three months of this year. However, production of cold rolled material, in the country, is limited. Taiwan remains the largest supplier, of cold rolled sheets and strip, to Europe.
Crucially, imports of hot and cold rolled sheets and strip, from Indonesia in 2018, exceeded the World Trade Organisation’s 3 percent threshold, at which developing nation exemption is lost. This is the year that was used in the recent review by the European Commission.
Prior to the announcement of the proposed changes to the safeguard measures, Eurofer submitted an antidumping complaint to the European Commission. This covered hot rolled stainless steel sheet and coil from China, Indonesia and Taiwan. This investigation, combined with the application of quotas for Indonesia, is expected to result in a reduction in imports of hot rolled stainless steel products, in the remainder of 2019.
The proposed changes, if agreed by the member states, will come into effect on October 1, 2019.
Raw Materials
Nickel prices have increased significantly, since early July. The threat of bringing forward a ban on ore exports from Indonesia, before the originally planned 2022 date, is the main cause of this dramatic rise. Further price advances could be recorded, if the date of the ban is confirmed. However, the current prices suggest that the market have already factored in a large part of the impact that this would have. Consequently, any additional price gains are likely to be modest and short-lived.
Inventories, held in LME warehouses, moved back above 150,000 tonnes. Cancelled warrants have also fallen, of late. This could signal that traders are getting nervous about the level that nickel prices have reached. Consequently, a downward correction in nickel values is predicted, later in the year.
Spot chromium prices moved upwards, in August. A modest increase is expected to contract prices in the fourth quarter, in the EU and US. Molybdenum costs moved upwards, this month. Values are likely to soften, in the near term, due to weak demand in the global market.
Stainless Steel Price Forecast
Rising raw material costs are expected to push global stainless steel transaction values upwards, in September and October. Ongoing trade disputes and antidumping measures, being implemented in nations on all continents, may restrict the availability of foreign material in many countries. This could encourage more customers to purchase from their domestic suppliers, in the coming months. Consequently, the traditional price downturn, usually observed in the final quarter, is expected to be muted, this year.