EU imposes 15% cap on HRC imports from non-EU countries,
targeting Vietnamese steelmakers.
- Tariffs on Chinese electric vehicles
could make European vehicles more competitive, boosting demand for
autobody from steel mills.
- Slowing German economy and high interest
rates by the European Central Bank prevent mills from raising prices
despite favorable conditions.
Via Metal Miner
Sources
said that steel manufacturing entities in northern Europe are unlikely to seek
price increases on hot rolled coil until July, despite events since May that
could create conditions to raise them. “If you do that, you seem very
opportunistic,” one source told MetalMiner. Mills were seeking €630-650
($675-695) per metric ton EXW in late May, up from earlier quotes of €620-630
($665-675) that month, though there are currently few takers.
On
May 31, the European Commission, the executive body of the European Union,
announced its plans to introduce a 15% cap on HRC imports from other countries
per quarter against its total annual quota. A second EU steel manufacturing
source told MetalMiner that this equates to approximately 140,000 metric tons.
“This will impact the structure of imports into the market,” the source added.
While
the cap is likely to impact imports from East and Southeast Asia, the source
remarked that the primary focus is Vietnamese steelmakers, which continue to heavily targeted
Europe. The same source noted that offers from Japanese, Taiwanese, and
Vietnamese mills are now about €645 ($690) per metric ton CRF at Italian ports.
European mills’ holding off on any price rises could thus result in their
products becoming much more attractive than imports.
Steel
Manufacturing Hopes to Benefit from Tariffs, Rate Cuts
In
addition to the steel import caps, the EC also introduced provisional import
tariffs of 17.4-31.8% on Chinese electric vehicles, citing excessive subsidies
and the fact that vehicles from the region are up to 20% less expensive than
those from European producers. A June 12 Reuters report noted, “The EU
provisional duties are set to apply by July 4, with the investigation set to
continue until Nov. 2, when definitive duties, typically for five years, could
be imposed.”
Higher
prices on electric vehicles from China could also make vehicles from within
Europe more competitive, thus pushing up demand for autobody from mills. One of
hot rolled coil’s applications is as feedstock for cold rolled coil and,
subsequently, hot dipped galvanized sheet, the latter of which the automakers
use to build vehicles. However, a difficult economic climate in Europe, which
includes a slowing German economy as well as record high interest rates by the
European Central Bank (ECB), continues to prevent mills from raising their
prices. “In practice, demand is dead all over Europe,” one source said.
ECB’s Bold Rate Cut to 3.75% Shakes Investor Confidence
On
June 6, The European Central Bank cut its deposit rate 3.75% from 4%, despite
concerns that inflation in the Euro Zone would stay above its 2% target until
late 2025.” The move has actually weakened investor confidence about further
rate cuts. Indeed, a recent Reuters report indicates that there is only one more fully priced in
before the end of 2023.
The
same report noted that only one central bank governor of the constituent member
states voted against cutting the ECB rate, while other policymaker said they
might have voted to hold rates.