A global hot-rolled coil (HRC) quota managed on a monthly basis could be a viable measure adopted by the EU steel safeguard review, according to steel association Eurofer.
The idea of a global quota was proposed to the European Commission by Hyundai Steel and the Korean Iron and Steel Association, according to documents obtained by Argus.
In a 13 January submission to the commission Hyundai Steel said a global quota allocated monthly would "help ensure smoother trade flows and better supply chain management, preventing distortions that could arise from uneven utilisation of the quota". The fact some countries quickly exhaust their 15pc of the other countries quota risks a "sudden influx" that can flood the EU market, Hyundai said. South Korean mills have their own quota, which typically only fills or goes critical towards the end of the quota period; it went critical earlier in this quarter, however, going critical in the second half of February.
The Korean Iron and Steel institute echoed the views of its member Hyundai, suggesting there should be monthly restrictions or increasing tariffs on volumes above the quota level.
In a submission to the commission earlier this month, Eurofer said this solution could be workable and prevent "gaming" of the system if accompanied by a first in-first out duty regime — meaning no pro-rata of duties on the first days of a quota — and if its earlier adjustments were adopted.
In a 10 January submission Eurofer requested that the flat steel quota should be cut by 50pc to better align quotas with current demand, and that if this was not possible other measures could be taken to reduce import penetration. These measures included the introduction of individual quotas for China and a melt-and-pour rule that means any steel produced using Chinese substrate could come under this quota; this would have most impact on cold-rolled and hot-dip galvanised coil imports produced using Chinese HRC.
Eurofer also asked for an increase in the 25pc duty where quotas have been filled; the introduction of first-in first-out, meaning all material pays the fully duty where quotas have been filled; the expansion of 15pc caps to other residual quotas, and the reduction of the HRC residual quota cap to 7.5pc. It also said there should be no carryover of leftover quota between quarters, that more country-specific quotas should be introduced, with a corresponding reduction in residual quotas, and that liberalisation of the quota should be removed.
While Eurofer and some importers seem to see eye-to-eye on the idea of a global quota, it is likely that they hold varying views on how much tonnage should be included duty-free.