European Commission allows Russia-origin slab, billet imports till 2024 on quota basis

• Quota volumes to match demand of EU steel processors
  
  
• Decision likely prompted by EU mills' worry over sourcing semis
  
  
• Russia+Ukraine account for 70% of EU27 semi-finished steel imports in Jan-Jul'22
  
  

Morning Brief: Russian-origin imports of billets and slabs into the European Union (EU) will be allowed till April and October, 2024, respectively, on a quota basis, the European Commission (EC) announced on 6 October, in its eighth sanctions package against Russia for its invasion of Ukraine.

EU will be allowed to import a total of 3.75 mnt of Russian slab between 7 Oct'22-30 Sep'23, as well as another total of 3.75 mnt between 01 Oct'23-30 Sep'24, according to the EC. For Russian-origin billet, EU importers will be allowed to import 487,202 t between 07 Oct'22-30 Sept'23. A further 85,260 mt of billet will be allowed between 01 Oct'23-31 Dec'23, and 48,720 mt of billet will be allowed Jan-Mar'24.

However, finished steel products processed in a third country using specifically Russia-origin billets and slab products will be allowed till 1 April, 2024, and 1 October, 2024, respectively, in line with the timeframe set for the ban on direct imports of Russia-origin slabs and billets into the EU.

In addition, for a small group of finished or semi-finished steel products that either originate in Russia or have been exported from Russia, a three-month wind-down period, until 8 January, 2023, will be in place to allow for the execution of contracts signed before the import ban on the semi-finished steel products was adopted on 7 October, 2022.

Furthermore, imports of finished steel products that have been "processed in a third country incorporating iron and steel products originating in Russia will be allowed until September 30, 2023," according to the EC.

Possible reasons behind the EC move

It is understood that the slab and billet import quota volumes set by the EC are almost the amount EU steel processors will need, market participants informed.

• EU mills worried: European steel producers are concerned about semis' supply, especially since many high-profile mills have closed temporarily to overcome the high energy prices which are rendering production unviable. Therefore, many are concerned about sourcing of slabs and billets. It may be mentioned that nine large companies, including European steel rerollers and traders, had earlier, on 27 September, written a joint letter, addressed to the EC, stressing on the risk "of sanctioning input materials for the rerolling business in Europe. More than 80% of the EU's semi-finished steel products come from Russia and Ukraine, according to the letter.
  
  
• NLMK focused on serving own plate mill: Following the Russian invasion of Ukraine in late February, and as a result of previous sanctions imposed on specific Russian companies and individuals, Russian mill NLMK became the main slab supplier into the EU from the Black Sea, with some European rerollers having to source material from alternative origins. However, NLMK has been focused on delivering slabs to its own coil and plate rolling mills in Belgium, France, Denmark and Italy, as well as some external sales to Central European buyers.
  
  
• Energy costs drive demand for semis in EU: It is obvious the EU energy crisis will not end in a hurry. The region may be staring at a finished steel shortage if semis supplies get chocked. Spiralling energy costs and the Black Sea blockade are supporting production cuts. There were reports that EU mills were turning to South East Asia for sourcing semis and longs. Semi-finished products are not subjected to import duties or quotas in the EU, while longs from Southeast Asia are seen replacing Turkey-origin products. Turkiye, on its part, is labouring under high energy costs and has had to resort to production cuts and not in a position to supply to the EU at present.
  
  

Russia's share in EU's steel imports

• EU27 imported 4.25 mnt of Russian-origin semi-finished steel in 2021 and around 2.8 mnt in January-July, 2022.
  
  
• Russia accounted for 50% of EU27 semi-finished steel imports in 2021 and nearly 53% in the first seven months of 2022.
  
  
• Russia+Ukraine accounted for nearly 85% share of EU27 semi-finished steel imports in 2021 and 70% in the first seven months of 2022.
  
  

The products for which Russia-origin imports are only allowed until 8 January, 2023, are listed in the following table:

• 7206 iron and non-alloy steel in ingots or other primary forms (excl. remelting scrap ingots, products obtained by continuous casting and iron of heading 7203)
  
  
• 7218 stainless steel in ingots or other primary forms (excl. remelting scrap ingots and products obtained by continuous casting); semi-finished products of stainless steel
  
  
• 7223 wire of stainless steel, in coils (excl. bars and rods)
  
  
• 7224 steel, alloy, other than stainless, in ingots or other primary forms, semi-finished products of alloy steel other than stainless (excl. waste and scrap in ingot form, and products obtained by continuous casting)
  
  
• 7229 wire of alloy steel other than stainless, in coils (excl. bars and rods)
  
  
• 7303 tubes, pipes and hollow profiles, of cast iron