The shortage of stainless steel coils and slabs in Europe has reignited market discussions about the European Commission's (EC) guaranteed quotas.

Initially, some industry reps called for a tightening of import volumes in response to a slump in demand caused by a pandemic in the second quarter of last year. However, at that time the European Commission rejected the request and the original quota remained in place as planned until June 30 this year.

Distributors and traders cut back on procurement activities during the first wave of the coronavirus. 2020 ended with a rapid rebound in demand from the automotive and white goods sectors, which quickly took advantage of existing stocks on the market.

Buyers eventually resumed ordering materials from steelmakers. Many chose to order tonnage from local steel mills instead of sourcing steel from third abroad. This was caused by the uncertain global situation. As a result, European stainless steel producers have begun to fill their orders quickly.

Late last year, it became apparent that material deficits in several grades and sizes of hot-rolled and cold-rolled coils would be a major issue in the first semester of 2021. However, prices in Asia are climbing as raw material costs increase and transportation charges more than double due to container shortages. This, combined with EC safeguard quotas and anti-dumping measures, has prevented many European stainless steel buyers from ordering imports to supplement domestic supplies.

Anti-dumping duties on material originating in China, Indonesia and Taiwan have significantly reduced the amount of hot rolled stainless steel sheet and strip going into the European market. In the first three months of this year, only 5% of the EC's safeguards quota was used.