The latest revision of the safeguard measures implemented from the beginning of October has effectively opened the door to the import of more Chinese HDG into Europe, traders confirm to Kallanish.

In the revision he European Commission the authorities say that, as from October, ”… Importers wishing to use the available quotas for Chinese metallic coated steel falling under the category 4b would need to demonstrate that the material imported was aimed at being used in the automotive sector.”

The change was needed because importers were using the 4b volumes to import Chinese HDG falling under the same CN code but not used directly in the automotive sector. As a consequence, the European Commission has extended the 4a category to also include CN codes contained in the 4b group, but not directly needed for the automotive sector.

It is now possible for importers to use the available ‘other countries’ quotas for 4a materials to import the same products from China without the need to demonstrate their use in the automotive sector.

“Clearly the paradox now is that we moved from being able to use the Chinese 4b quota of some 500,000 tonnes/year to the possibility of adding to that quota the 1.9m t/y in the 4a allocation,” a trader explains. “I believe most importers will not use the 4b going forward as it is easier to use the 4a even for automotive material. Take in consideration that not many countries are competitive in that sector, so Chinese production can easily take most of the quotas for 4a general provenance.”

Another trader confirms the situation, but is not sure if the European Commission would take action to stop this from happening going forward. The uncertainty on this issue is set to continue, Kallanish understands.

According to the official system to calculate available quotas, the 4b Chinese allocation for the period July 2019-June 2020 was exhausted on the first day the new ones became available (see Kallanish passim).