"It will be the new D-Day," is the concise comment of a trader when asked what will happen on October 1, when the safeguard quotas for the fourth quarter will be made available in the EU. Huge volumes of steel have been at a standstill in Italian ports for weeks: 500,000 mt of flat products would come from India alone, according to SteelOrbis sources. And India itself would have been the first responsible of the strong congestion observed in recent weeks at EU port. "More than congestion I would call it collapse," commented Gianni Alberti, owner of Seaway, a company specializing in the logistics of steel products. "It had never happened that ships changed port, except for contingent reasons, such as particular atmospheric situations. Some of our ships from Marghera have been diverted to Monfalcone, Trieste, Koper," he added. In addition to India, Turkey also appears to be able to quickly run out of various tariff quotas, for example those relating to hot rolled coils and HDG. In the case of Indian HRC, as early as October 1, importers will have to pay a duty which is estimated to be "between 15 and 20 percent." Even some long products, namely wire rod and rebar, would have exhausted their quotas for the upcoming quarter, albeit recently. However, at the same time, Mr. Alberti reassured that there are products for which customers can remain relatively calm: "Concerning metal coated sheets (category 4.B) coming from China, the quarterly quota amounts to approximately 118,600 mt. Last quarter this was exhausted on August 26, so it can be assumed that the same situation will reoccur and that therefore it will not be essential to clear customs on October 1." Nevertheless, the situation in general remains critical: due to the safeguard, explained Alberti, "our customers have empty warehouses, they are unable to meet the orders they receive. I'm referring to service centers, but also and above all to end-users, or those who produce and then export their products." For example, "there is no tinplate for cans and what is produced in Europe is not enough to cover the needs. Or, again, the lack of magnetic sheet metal, which is used to produce engines, has hindered the distribution of cars a lot." To all this are added the now well-known problems of the huge increase in freight rates and the shortage of trucks.
The imports have been having a negative impact on the coils prices in Europe in the past weeks. European producers hoped to be able to withstand downward pressures as supply remains limited, with delivery times amounting to two to three months. However, buyers have reduced their demand as they are waiting to understand what exactly will happen after October 1. In addition, automotive demand continues to suffer from global semiconductor shortages, a problem that has now begun to hinder home appliance manufacturing as well. Against this backdrop, transaction prices in Italy have dropped further in the past week, from €970-1,020/mt to €960-1,000/mt ex-works. At the same time, prices in Northern Europe fell from €1,040-1,090/mt to €1,040-1,070/mt ex-works.
Source: Steel Orbis