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BMZ's rebar exports to EU seen hindered by 10.6% AD duty

The EU Commission has imposed a 10.6% definitive anti-dumping duty on imports of hot rolled and cold-twisted deformed bars from the Republic of Belarus – that is, from Byelorussian Steel Works (BMZ), the country’s sole rebar exporter. The duty corresponds to the revised injury margin. One immediate reaction from a Polish distributor was: “So BMZ is not coming back to the Polish market.”

Its investigation was initiated in March 2016 following a complaint by the European Steel Association (Eurofer) on behalf of producers accounting for more than a quarter of the total EU rebar production. Having investigated imports during the year 2015 of products under CN codes 7214 10 00, 7214 20 00, 7214 30 00, 7214 91 10, 7214 91 90, 7214 99 10, 7214 99 71, 7214 99 79 and 7214 99 95, it imposed a provisional AD duty of 12.5% in December 2016. The definitive duty is applied to the products falling within the above codes excluding high fatigue performance iron or steel concrete reinforcing bars and rods and round bars and bars without deformation.

Eurofer is not left satisfied with the decision, claiming that the revised injury elimination level is not high enough to remove injury. In its turn, BMZ petitioned to agree a partial duty-free amount, e.g. the first 200,000 mt, but the request was not accepted. Responding to the news, one German stockholder said: “For a product priced above €400, 10.6% is still a good percentage, but let’s see how well buyers can cope.”

In 2015, BMZ exported to the EU 457,755 mt of rebar, representing 5.6% of the union’s 8.15 million mt consumption that year. This was a jump of 94% from 2014, the year the company’s share of this market stood at 3% provided by 236,109 mt imports. Over the same period, rebar capacity utilization at EU mills’ declined to 69% from 73% in 2014 and their domestic market share went down to from 79% to 76%, S&P Global Platts learnt from the Commission’s document.

“During the investigated period, BMZ rebar was no more than 5% cheaper compared to the average European domestic price [the undercutting margin found by the Commission is 4.4% overall and 2.8% only in regions whose producers face direct competition with BMZ rebar]. That said, 10.6% is perhaps the lowest or one of the lowest duties that has resulted from anti-dumping investigations,” said a CIS source.

“Antitrust proceedings against six Italian rebar mills suspected of alleged price-fixing [case initiated in Q4 2015] turned to BMZ’s advantage. The duty could have been twice as high but because of this cartel investigation by Italian Competition Authority, the EU Commission was prone to take the side of rebar consumers also paying due attention to BMZ’s submissions,” he added.

That said, the duty made the EU market unattractive at least while the euro value against the dollar remains at its current low level of $1.1. If only the euro appreciates to its former value of $1.3, this duty may diminish to almost nothing and the market will become interesting again, according to the source.

BMZ had already substantially decreased its rebar sales in the EU. For instance, in January-May last year, it sold 60,000 mt to Germany, 10,000 mt to Poland and 15,000 mt to the Netherlands. In the same five months of this year, these countries received nil rebar tonnage from Belarus, according to the source.

As a result, the mill’s rebar capacity remains underutilised but it does not mean that BMZ is losing in the overall output as it has ramped up sales of higher value products, mainly engineering steel bars. It does not give up in restoring its rebar sales though. Strategically, it aims to increase sales in Russia – at the end of 2016 the country’s economy returned to growth and its steel demand is set to improve - and also in non-EU Europe, including in Norway, Iceland, Serbia and Montenegro. Besides, BMZ is working to re-establish trade contacts in North Africa and the Middle East where it used to sell much more rebar prior to the Arab Spring of 2011, Platts was told.

-- Ekaterina Bouckley with Wojtek Laskowski and Erica Sesay

Steel Business Briefing Ltd (SBB)

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