EU hot-rolled coil, coated steel market still attractive to Russian Severstal

London — The EU hot-rolled and coated flat steel market remains attractive to Russian steelmaker Severstal despite the safeguard measures introduced by the European Commission this summer, a company spokeswoman told S&P Global Platts.

Even the 25% import duty, applicable after the quota is met, should have only "a limited effect" on Severstal's business in the EU as the company already is in a more favorable situation than other Russian mills, which have higher anti-dumping duties on hot rolled coils.

Since last year Severstal's HRC has been a subject to Eur17.60/mt ($20/mt) anti-dumping duty. The company has a large service center and stock facility in the EU, represented by sites in Latvia and Poland.

Severstal continues to supply the Latvian site with Russian HRC feedstock under the existing import tariff, to produce mostly higher added value products: welded tube, strip and precision-cut sheet of thickness up to 12 mm. About 70% of the Latvian plant's steel processing operations use HRC supplies from Russia.

However, the duty is biting into margins. This was particularly tangible at Severstal's Polish operations focused on welded tubes. This has affected not only Severstal but Polish tube makers in general, whose competitiveness started to suffer from the lack of cheaper HRC from the Commonwealth of Independent States. For this reason Severstal concentrated its EU production operations in Latvia, the spokeswoman said.

Severstal's EU customer portfolio consists of large buyers in 10 countries around Central and Northern Europe. In the coming years the company will seek to grow its European business by offering coated material including galvanizing (thickness 2mm) and chromium coating.

Sources : S & P Global Platts