Government Measures Disturb International Stainless Steel Trade
The global flow of stainless steel products has been negatively affected by the introduction of new trade barriers, in recent years. MEPS predicts that more disruption is possible.
The imposition of antidumping duties, by the US authorities, severely reduced shipments of stainless steel sheets and coils from China. Subsequently, Section 232 quotas and tariffs restricted imports from many other countries – notably, those in the Far East.
These actions were, clearly, intended to reduce the volume of purchases from overseas suppliers, and create opportunities for US steelmakers to increase their sales, expand production and employ more people. In fact, the major outcome has been price inflation in the domestic stainless steel market, raising costs for US customers. Furthermore, many imported products remain competitive, even after the application of duties or tariffs.
Local market observers believed that the Section 232 measures would be removed, in the short-to-medium term, following the achievement of various trade-related goals, by the US government. This prospect, however, is receding and the controls are likely to remain in place for the foreseeable future.
The European Commission reacted with safeguarding measures, to prevent third country tonnages, previously intended for the US market, from being diverted to the EU. Quotas were introduced, for individual products, for an initial 200-day period, based on recent average import tonnages. Recent figures show that, at the current rate, shipments of several products, including stainless steel bars and wire rod, are likely to exceed the quotas, and, consequently, incur tariffs. Purchasing behaviour is being adapted, accordingly.
Further uncertainty stems from the United Kingdom’s exit from the European Union. The “divorce” agreement, negotiated by the UK government and the EU, has yet to be accepted by the British parliament. Businesses must explore contingency plans.