For the hot rolled carbon and alloy engineering bar products supplied by Hillfoot Steel, the proposed changes are substantial.
In light of this latest development, we want to explain what these changes may mean for your material supply, costs and future availability.
Key changes at a glance - here’s what you need to know
Significant reductions in quotas for alloy bar products (Category 12A)
Near elimination of quotas for certain carbon bar products (Category 12B)
Increase in duties on over-quota material from 25% to 50% of Good Value
Introduction of a new category (Category 27) covering cold finished bar
What this means in practice
While the policy is designed to support UK steel production, the reality for engineering bar is more complex.
Currently:
There is no UK melting or hot rolling of commercial-grade engineering carbon and alloy steels
There are no commercially viable UK alternatives for cold finished bar ≥ 80mm dia
As a result, imports remain essential to meet demand.
Additional pressure on supply due to reclassification
We also anticipate a shift in how materials are classified:
Some products currently imported under Category 12B may be reclassified into Category 12A. This is achieved through minor chemical adjustments, with little cost impact
As 12B quotas reduce to near zero, this will place significant additional pressure on 12A quotas.
The likely outcome is that quotas across both categories are exhausted more quickly, resulting in 50% duties being applied more widely.
We’ve produced a table that shows which categories and the origin of material that is affected by these new annual import quotas changes.
Annual Import Quota Changes (Tonnes)
Unpacking what this table means
Supply constraints and category risk.
There are a wide range of product types that fall within Categories 12A, 12B and 27. While some of these are produced by UK steel manufacturers, many are not, specifically engineering carbon and alloy steels.
As a result, imports remain essential to meet market demand.
Risk of category reclassification
Although the revised quota for Category 12A may appear sufficient on paper, there is a recognised risk within the market.
It is widely understood that some importers of Category 12B products can make minor adjustments to chemical composition, often with little or no cost impact. This enables material to be reclassified and imported under Category 12A.
Category 12B quotas - a potential loophole for importers
With Category 12B quotas effectively reduced to near zero, it is expected that importers will increasingly adopt this approach to avoid the 50% over-quota duty.
However, given that import volumes for Category 12B are significantly higher than those for 12A, this is likely to result in:
Accelerated exhaustion of the Category 12A quota
A greater proportion of imports falling subject to 50% duty
Additional cost pressure across both categories
Unintended consequences - and impact on customers
This broad brush approach to quota amendments risks creating unintended consequences across the supply chain. The impact of these changes is by no means insignificant, so we’ve mapped out our honest assessment of the likely impact.
Short term impact
Increased raw material costs
Reduced availability of key grades
Greater supply chain pressure.
The medium to long term view
Exports of UK manufactured finished goods reduce due to cost and/or availability disadvantages of raw material.
Imported, lower cost finished goods increases at the expense of parts being manufactured in the UK, risking long term, irreparable demand to the UK manufacturing supply chains. (It’s worth noting that there is no import protection on finished steel parts, only on the raw material.)
Delays to critical projects and infrastructure development via key sectors such as automotive/motorsport, off highway and defence.
Our position and actions
We fully support the principle of strengthening UK steelmaking. However, we firmly hold the view that it is essential that downstream manufacturing and supply chains are also protected.
To that end, Hillfoot Steel is:
Engaging with the Trade Remedy Authority (TRA) to advocate for engineering bar to be treated as a distinct category
Increasing import volumes where possible to help mitigate short-term supply risks, and to counteract the impacts to cost and availability.
Monitoring quota utilisation closely to support continuity of supply
We’re here to help
Naturally, these changes will be of concern to all our customers, so we will continue to keep you updated as the situation develops.
If you’d like to discuss how these changes may affect your business, or would like to talk about your requirements in more detail, please don’t hesitate to get in touch.
Either call your usual Hillfoot contact direct, phone 0114 233 1133 and ask to speak about steel quotas. Or you can drop us an email salesenquiries@hillfoot.com.
