Mysteel interpretation: The EU or Vietnam hot roll anti-dumping review "behind"

Key ideas:

Following the announcement of a new round of EU quota implementation measures in early July, the European Commission issued a document claiming that it will conduct an anti-dumping investigation on Vietnam's imports of hot rolls, and once the review is landed, it will increase tariff measures on Vietnam's exports of hot rolls, reduce Vietnam's share in the European market, suppress Vietnam's local hot roll manufacturers, and promote the country's oversupply situation.

On the other hand, in this context, Vietnam opened anti-dumping investigations on China's hot roll, or indirectly made China's export pressure further highlighted.

Introduction 1: The EU opens a new round of quota arrangements

Since 2021, the inflow of imported steel into the EU has exceeded the level even before the start of the safeguard measures in 2018. In early July this year, the European Commission published the European Commission's steel import quota period for the new quarter (July 1 to September 30). With the new rules capping each country's quota at just 15 percent, Vietnam has already exceeded the EU quota by 66,239 tonnes, Japan by 56,937 tonnes and Taiwan by 48,942 tonnes.

Introduction 2: The EU may launch an anti-dumping review of hot rolls originating in Vietnam

On July 29, 2024, the Directorate-General for Trade of the European Union (EU) received an official document requesting the initiation of an anti-dumping investigation into alloy, non-alloy hot coil and other alloy steel products originating in Vietnam. According to the document, once the European Commission decides to launch an anti-dumping investigation against the above-mentioned Vietnamese steel, the Official document will be published in the Official Journal of the European Union.

I. Analysis of Vietnam's export of hot rolled coil to the EU in the past three years

Among them, the top five exporters accounted for 56% of the EU's total imports of finished materials. India maintained its position of the main exporting countries (15.8%), followed by Turkey (12.6%), Vietnam (10.3%), South Korea (8.9%), Taiwan (8.7%), Japan (6.8%) and China (6.6%). Among them, China and South Korea's imports fell by -38% and -11%, respectively. On the contrary, Taiwan from China increased by 17%, Japan increased by 10%, Turkey increased by 85%, India increased by 62%, and Vietnam increased particularly significantly, reaching an increase of 155%.

By type, in the first four months of 2024, EU imports of plates increased by 30%, while imports of long materials fell by 9%, overall, imports of finished products still increased by about 20%, and imports of plates increased by 30%. Specifically, the hot rolled wide steel strip increased by 51% year-on-year, as well as the hot plating growth of 44%, coated plate growth of 41%.

If you specifically compare the data of the past three years, it is not difficult to find that Vietnam's total imports to the EU and the total imports of plates are showing an increasing trend, especially in 2023, the growth rate increased by 3% and 2.6% respectively (in 2020 and before Vietnam's exports to the EU are not recorded in the list of top ten importing countries, the import amount is between 3,000 tons and 500,000 tons). In addition, in the first four months of 2024, the number of finished products exported by Vietnam to the EU increased by 155%, thus, the rapid growth of the number of Vietnamese imports to the EU is one of the causes of EU anti-dumping against Vietnam.

Analysis of the causes of EU landing review

The price of resources in the Vietnamese market is extremely advantageous in the whole EU market, which also makes the import volume rise significantly. Currently, the price of hot rolls from Vietnam to Southern Europe is 570 euros/ton CFR ($617 / ton), the price of hot rolls from Saudi Arabia and Turkey to Italy is 600-610 euros/ton ($650 / ton - $660 / ton CFR), and the price of hot rolls from Indonesia and South Korea is 590 euros/ton CFR ($638 / ton). This seriously affects the local hot coil production enterprises. The reason for Vietnam's low-cost resources is that some enterprises import low-cost Chinese resources after processing and re-export to Europe, some processed into hot rolled wide steel strips, and some processed into galvanized products and then sold to Europe for downstream production.

According to the latest release of EU economic data, real consumption contracted by 2.1% in the fourth quarter of 2023, and fell again by 6% in the first quarter of 2024. The SWIP index of the automotive industry, which accounts for more than 18%, is expected to fall by more than 3%, and the construction industry, which accounts for 35%, is expected to fall by 1.4%. In this economic background depression and oversupply situation, in contrast to the EU import volume increase significantly, then the pressure on the market will be more and more prominent, so the anti-dumping review must be any country to safeguard the interests of the means, Vietnam import growth is particularly prominent, so Vietnam 'start' is sooner or later.

In fact, since the EU carried out quota measures to restrict exports in 2018, China's exports to EU countries have decreased year by year, and in 2023, China's direct exports of steel to the United States are only 850,000 tons, accounting for 0.9% of China's total steel exports. China's direct steel exports to the EU were 3.66 million tons, accounting for 4% of China's total steel exports. But starting in April, the EU's rhetoric against China's massive steel exports suddenly heated up. Taking China's indirect steel exports as an example, in the first half of this year, automobile exports increased by 22.2%, which led to the announcement of the European Commission on July 12, decided to impose a temporary countervailing duty of 17.4-37.6% on electric vehicle imports from China.

Faced with these challenges, Chinese enterprises began to transfer exports to Southeast Asian countries, such as Thailand, Malaysia, Vietnam, etc., in order to ease domestic supply and demand pressure. In terms of countries, China's exports to major regions other than the EU maintained growth in the first half of the year. Exports to ASEAN 16.501 million tons, an increase of 32.0%, accounting for 30.9% of the total steel exports; Among them, the export to Vietnam was 6.372 million tons, an increase of 73.8%; Exports to GCC countries increased by 40.2% year-on-year to 5.738 million tons, of which exports to the UAE and Saudi Arabia increased by 51.3% and 44.0% respectively. Because the EU can not directly put pressure on China's steel exports, or further pressure is not meaningful, so take 'Vietnam' as a breakthrough, trying to reduce China's indirect steel exports.

Iii. Impact analysis in the short term after EU anti-dumping landing

On the other hand, due to the new quota regulations of the EU, the number of Vietnam's exports to Europe will be reduced by 545,600 tons (Vietnam's exports to the EU in 2023, 1.113 million tons of hot-rolled coil) exports are facing obstacles, resulting in Vietnam's local may face overcapacity, especially in local enterprises such as and heating coil production has reached a new record. And 2025 annual production capacity will be increased under the premise (2025 is expected to put into operation, the total production capacity will reach 14 million tons/year, of which hot coil capacity of about 8.6 million tons/year), if not China to take anti-dumping measures, is bound to magnify the local oversupply pressure.

In fact, not only the EU, the United States has also felt the pressure from the Vietnamese market, in 2010, the United States imported less than 40,000 tons of steel from Vietnam. By 2018, imports from Vietnam exceeded 1 million tons, and the volume would have been much higher without Section 232.

But in the final analysis, the new EU quota regulations have largely suppressed the number of Vietnam's imports, and the number of India and Turkey exports to Europe is much more than Vietnam, so the possibility of landing anti-dumping investigations against Vietnam is unlikely, but it can also reflect that the European review of documents or also in order to suppress China's steel exports from the side. But as to whether the investigation will be really launched and landed, it still needs to draw a question mark.