European buyers are increasing imports of finished stainless steel from countries such as Taiwan and Turkey due to a favorable price spread relative to European supplies, rising lead times from domestic mills, and delays to existing orders, market participants told Argus this week.
Orders are being placed with companies exempted from EU SSCR duties as part of the EU's recent anti-circumvention investigation, with Taiwan heard to be the favored source given that most of the country's producers were excluded from countervailing duties.
The supply of stainless steel across Europe has tightened following extended strike action at Spanish producer Acerinox and a wider industrial walkout in Finland, which has affected operations at major producer Outokumpu. Indefinite strikes at Acerinox have exceeded two months, with the latest round of talks between the company and the strike committee held on 27 March failing to end the impasse. 1The loss of production at Acerinox and Outokumpu has squeezed capacity at other large mills in Europe. Mills across the region are now quoting a delivery time of June for new production orders, two traders told Argus today. While many distributors are unperturbed given weak downstream demand and sufficient available stocks, other buyers are moving to secure supply from Asia due to concerns that the current disruption will not ease quickly. "We are seeing a lot of volume being booked from Taiwan," a trader said.
Alongside the supply problems, another factor driving an increase in imports is lower achievable prices. Stainless steel import prices from Asia are €100-200/t lower than from Europe after European mills hiked offers for April, market participants said. Service centers are finding imports more attractive as a result, given that they have not been able to pass on domestic price increases to their customers. "Service center margins are very low," a second trader said. "Mills are asking them to pay more, but their [service centers'] customers will not pay any more.
"The threat from imports is still relatively limited, with participants insisting that much of the market has access to sufficient material domestically to ride out the supply tightness. However, further delays to delivery times could change the trend significantly in favor of imports, especially as import quotas from Taiwan and Turkey have been under-utilized this year due to the EU's anti-circumvention investigation. Interest in imports has surfaced even though the investigation's results are provisional and a final European Commission report is only expected in May, indicating that some buyers are in a rush to cover second and third-quarter requirements.
