Key facts
- EU import measures implemented July 1 include reduced free allocations and 50% tariffs.
- Traders are rerouting steel cargoes, including Indonesian, Thai, and Turkish products, away from the EU.
- Turkey's HRC quota is significantly oversubscribed, with over 370,000t pending clearance.
- A Brazilian cold-rolled steel shipment is being redirected to the UK.
- EU domestic steel prices have increased by approximately €50/t due to import disruptions.
Steel traders are rerouting cargoes away from the European Union following the implementation of new import measures on July 1, which include substantial cuts to free allocations and a doubling of tariffs to 50%. The technical details of the quotas were announced just before the implementation, leaving market participants with little time to adjust contracts signed months in advance.
Cargoes already at sea or at EU ports now face significant over-quota duties. While some importers could delay customs clearance to the next quarter, EU port warehouses are reportedly full, and some steel products may be stored outdoors, risking deterioration. The rerouting has involved Indonesian and Thai hot-rolled coil (HRC), with some offered to North Africa. Indonesia, a major supplier, has a quarterly quota of 31,000t.
Turkish plates, now subject to the HRC quota, are also being offered to non-EU customers. Turkey is currently the most oversubscribed country for HRC quotas, with over 370,000t pending clearance against a 160,000t quota. A vessel from Brazil carrying cold-rolled steel, with a quarterly quota of 3,534t, is being redirected to the UK.
Market participants report renegotiated contract terms, with traders attempting to shift liability for out-of-quota tariffs to customers. The import disruptions have led to increased demand for domestic EU production, with mills raising offers by approximately €50/t. However, these increases are currently moderated by seasonal factors, a weak economic backdrop, and sufficient existing stock levels.