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Europe Sections Prices Unexpectedly Fall after EU Announces Quota-tariff Plan

https://en.steelhome.com [SteelHome] 2019-01-17 14:23:34

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Prices for hollow steel sections in Europe moved down on Wednesday January 16, to the surprise of some market participants.

Fastmarkets' domestic price assessment for commodity-size, grade-S235 square hollow sections made in Northern Europe narrowed downward by €5 per tonne to €635-645 ($726-738) delivered on January 16, from €635-650 per tonne delivered on January 9.

This was the first time that prices have changed in the past seven weeks.

Last week, the European safeguard quota for sections was almost fully taken up, with renewal not expected until February. Because of this, market participants expected a price increase of €10-50 per tonne on the likelihood of heavier reliance on the domestic market.

But the opposite happened this week, due to the uncertainty caused by the announcement of plans for definitive measures by the European Commission (EC).

Fewer than 2,000 tonnes remained to be allocated on Wednesday from the current 387,343-tonne import quota for hollow steel sections, before a 25% tariff is applied.

This was down from 5,000 tonnes remaining last week, meaning a fall of 3,000 tonnes in one week. It is expected that next week the quota will be fully taken up, with more than 500 tonnes of material awaiting allocation at the time of writing.

"When safeguard quotas are filled by 90%, they are classified as 'critical' and we understand that imports will only be cleared through EU Customs with a letter of guarantee from a bank saying that the exporter will pay the tariff if necessary," Fastmarkets analyst Lee Allen said.

The EC recently notified the World Trade Organization (WTO) of the findings in its safeguard investigation into steel product imports, and of its intention to impose definitive measures in the form of tariff-rate, partially country-specific and quarterly quotas for 26 steel product categories.

The definitive measures should be introduced before the end of the 200-day application period for provisional measures, which means before February 4, 2019.

"[Potential customers] are all scared to buy. We needed to buy because we couldn't wait any longer," a distributor said. "The import quota is a terrible thing. There is no need for Europe to do this; it's just giving local producers extra margin. I think prices will increase."

Fastmarkets' weekly domestic price assessment for commodity-size, grade-S235 square hollow sections made in Southern Europe came down by €10 per tonne to €630-640 per tonne delivered on January 16, from €630-650 per tonne delivered one week before.

"The new import quota is very similar to the one we have now. I see no problem with it, except that it's a lot of [administrative work] to keep up with," a trader said.

"Prices have gone down in Southern Europe, with no imports, [although] I thought they might go €10 per tonne higher," he added. "[But] the mills need business, they knew the import quota was ending, so prices came down."

Source from Fastmarkets Metal Bulletin
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