From 1 January, the UK will have its own post-Brexit steel import quotas, mirroring the existing EU scheme, which is administered quarterly, and on a country-by-country basis. The EU based its own quotas on average imports for 2015-17, which again the UK is expected to mirror.
But nobody has been informed of what the quotas will actually be, leaving people fearful that if quotas are filled, they could have to pay duties on material booked in recent months.
As a result, the International Steel Trade Association (ISTA) has written to the UK's Department for International Trade (DIT) requesting a "shipping clause". This means that material already on the water would waive quotas and any potential duty — the EU had the same clause in its scheme, to the chagrin of domestic producers.
Given the quota uncertainty, buyers are mainly refusing to take any material that is not sold on a delivered duty paid basis, as they do not want to be liable for any tax.
Traders are also concerned that the volume of quotas will initially be insufficient for the market, and not adjust for recent changes in trade flows. Some suggest that on certain products, quarterly quotas could be below their typical vessel size. The ISTA has suggested that the UK should adopt a global quota, but the DIT wants to stick with the European system.
Rebar is one product that could be tight. The 2015-17 average for UK third-country rebar imports was 269,293 t/yr. Theoretically, a quota level based on this would be sufficient, given that imports in 2018 and 2019 were 265,217t and 238,253t. But China accounted for 380,037t in 2015, and is no longer able to ship to the UK because of European anti-dumping duties that will remain in place after Brexit.
Since China's exit, Turkey has been a go-to source for all important Cares-approved rebar. But in 2015-17, it averaged only 59,332 t/yr to the UK; in 2018-19, it averaged 93,808t. There is a clear shortfall here. And given that around half of the domestic fabrication market is owned by Celsa, independent fabricators need another source of supply, although Liberty has now started to produce limited sizes in the UK.