EU changes in HDG and CRC quotas will hit imports
The European Commission's proposed changes to protective steel import quotas, effective April 1, are expected to affect shipments of hot-dip galvanized (HDG) and cold-rolled rolled steel (CRC) due to proposed restrictions on individual suppliers' access to the distribution of "other countries" in the amount of 13-25%, depending on the product category.
For CRC, the limit is 13%, which affects key suppliers Vietnam, Taiwan, Japan and Turkey. The new CRC"others" quota will amount to 334,369 tons in April-June for other countries, which is 43,467 tons per supplier. The change mimics the restriction introduced last year for quotas for hot-rolled coils (HRC).
The limit on imports of galvanized steel is higher, with a 20 percent limit on imports of 4B auto-grade HDG from other countries, with Turkey, Vietnam and Japan identified by the commission as the main suppliers. The limit is 25% for 4A HDG quotas, which affects Turkey, Vietnam and Taiwan.
This will allow each country under other countries to supply 118,012 tons/quarter of 4A HDG, with a total quota of 472,049 tons for the next quarter. For 4B HDG, the quota for other countries will be 104,770 tons, which will amount to 20,955 tons per country.
The remaining volumes from previous quarters will not be carried over from July 1 for CRC and 4A HDG, however, the mechanism will remain in effect for 4B HDG quotas.
In 2024, imports from Vietnam, Turkey, Taiwan and Japan totaled 2.15 million tons of HDG to the EU, including categories 4A and 4B. In the last quarter of 2024, Vietnamese HDG imports to the EU alone totaled 321,405 tons, equivalent to more than 56% of other countries' total quotas for the same period for 4A and 4B combined. The total volume of 4A and 4B that Vietnam will be able to use from April will be just under 140,000 tons.
The reaction of Turkish market participants was mixed today, but there are expectations that a reduction in Vietnamese volumes may help Turkish HDG sellers, despite the fact that Turkey will also face the same restrictions, as well as dumping duties. Vietnam has taken up most of the quota, and now the changes are likely to allow more to enter the EU from other suppliers.
The combined volume of CRC shipments to the EU from Turkey, Japan, Taiwan and Vietnam amounted to 1.38 million tons in 2024 and reached 339,909 tons in the fourth quarter alone. This will drastically reduce CRC imports, since according to current adjustments, other countries will have quotas of 43,467 tons per quarter for the period from April to June.
Initially, a more significant reduction in quotas was expected at the request of the European Steel Producers Association Eurofer. With the exception of Vietnamese HDG, the adjustments are unlikely to drastically change import volumes, according to market participants.
"Limiting quotas on CRC and HDG will reduce our exports, but we expected more drastic reductions. We still have