May 20, 2021
UK steel safeguard change meets cold reception
2021-07-14
The UK Trade Remedies Investigations Directorate's (TRID) preliminary steel safeguard extension has prompted discontent.
Rebar fabricators point to government guidance that it will need an estimated 7.6mn t of steel over the next decade for public infrastructure plans — up from last year's estimate of 5mn t — and suggest the quotas are insufficient.
Russia's rebar quota is forecast at just 6,122t in each of the third and fourth quarters, a quantity that could be exhausted in one vessel, and which will probably go unutilised as a result. At the same time, a small portion of domestic production is offline at Liberty Steel, given its working capital problems.
Independent rebar fabricators, as always, bemoan the fact that primary domestic producer Celsa has 50pc of the downstream market at a time when imports are being curtailed. Government data also showed that of the £148mn of steel it purchased in 2019-20, at least £108mn was produced domestically. There is a busy construction project pipeline in the UK, including the High Speed 2 rail route, which fabricators believe has been overlooked by TRID, whose analysis is based on past demand and imports.
Traders, unsurprisingly, are unhappy with how tight some quotas are. Russia has a quarterly hot-rolled coil (HRC) quota of just 11,782t for the rest of 2021, while Turkey has just 22,982t. There is a risk these could be exhausted as some buyers have been forced to turn to imports, given long European lead times and high prices.
Automakers will be more content, given the proposed revocation of 4b hot-dip galvanised quotas. But producers and trade unions say the decision to "slash the crucial safeguards" threatens jobs and jeopardises the future of the steelmaking industry.
"This government has had plenty of warm words for steelworkers, but now it's come to the crunch it seems we're being thrown under the bus, left to the mercy of a catastrophic surge of cheap foreign imports," the National Trade Union Steel Co-ordinating Committee stated in a letter to international trade secretary Elizabeth Truss.
Gareth Stace, director-general of producers' association UK Steel, said the quota cut was "madness" and a "hammer blow" to the sector. "It surely cannot seem right to anyone to remove protection on steel sections made in Teesside, tubes made in Hartlepool, wire rod made in Cardiff, Scunthorpe and Rotherham, or plate made in Motherwell. These steel sites provide thousands of well-paid jobs outside the southeast — the very epitome of the levelling up agenda," Stace said.
Releasing its judgement yesterday, TRID said safeguards have been removed where there is no domestic production, or no threat of injury from imports. Quotas on sections, wire rod and merchant bar will be revoked under TRID's proposal, which surprised some, given these products' previous import penetration.
Buy-side submissions to TRID as part of its review focused on the uncertainty surrounding Liberty Steel.
"The situation with Liberty Speciality Steels is deteriorating. What stock we thought they had for us is not being manufactured in the time lines they had originally promised. Our customers' production lines must not stop, so our hands are now being forced to import more steel and run the risk of more tariffs," TVS-Cramlington Precision Forge said.
By Colin Richardson
Source: Argus
