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.

The EU has initiated 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.

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.

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

India: 15.8% Turkey: 12.6% Vietnam: 10.3% South Korea: 8.9% Taiwan: 8.7% Japan: 6.8% China: 6.6% China: -38% South Korea: -11% Taiwan: 17% Japan: 10% Turkey: 85% India: 62% Vietnam: 155%

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%.

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 addition, in the first four months of 2024, the number of finished products exported by Vietnam to the EU increased by 155%.

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.

Real consumption contracted by 2.1% in the fourth quarter of 2023 and fell by 6% in the first quarter of 2024. The SWIP index of the automotive industry is expected to fall by more than 3%, and the construction industry is expected to fall by 1.4%. EU import volume is increasing significantly, putting pressure on the market. Vietnam's import growth is particularly prominent, so Vietnam's 'start' is sooner or later.

China's direct exports of steel to the United States in 2023 were 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. The European Commission announced on July 12 that it decided to impose a temporary countervailing duty of 17.4-37.6% on electric vehicle imports from China.

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.

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.

However, the possibility of launching and conducting the investigation still remains uncertain.