What is the impact of current quota restrictions?

From the 1st January 2022, the TRA (Trade Remedies Authority), the body which decides on what the quotas should be, changed the quota for certain Category 12 products. Here we look at what impact this is having on Hillfoot and our customers.

In relation to our products, the quota was split in sub-categories of carbon products and alloy products. Carbon products were allocated a quota of 32,110 tonnes, and alloy products 13,708 tonnes. The SLA or HMRC have not shared figures on the actual amounts imported throughout 2021 for these sub-categories, so it was unknown what impact this might have.

Throughout the course of January 2022, Hillfoot have been working hard to try to understand this, though with very limited direct contact to the HMRC or a willingness for them to share this information, this forecasting was not made possible. We resorted to tracking the quota consumption through HMRC online portal, but a delay in their system has limited this visibility, and therefore what accurate information we have been able to provide to our customers.

Unfortunately, yesterday, we received contact from the HMRC advising that the quota for alloy products has all but expired, despite the HMRC online system not showing this.
NB Approximately 50% of carbon product quota still remains.

This means any black alloy products entering the UK from European origins between now and the 31st March are subject to a 25% tariff, which neither our business or the market is able to withstand.

Whilst we expected the quota would run out at some point, what has come as a surprise is that it’s come this soon, and even more surprising is the delay in how the quota position has been communicated to the public domain.

Whilst this news in disappointing, and we will undoubtably observe shortages in pockets of material, we are still in the fortunate position whereby we have increased our stock levels by 35% over the last 12 months in an attempt to mitigate some of the risk associated with the current quota restrictions.

Our sales team will be in touch to advise how this might affect you, and any potential remedies that could be applied.

As a company that, in the past, has sourced significantly from UK producers, decisions taken by those producers have forced us to seek our product from overseas in order to remain commercially viable, and maintain a consistent and quality driven supply to UK based engineers and manufactures.

And, whilst the manufacturing of some Category 12 products remains in the UK, specific sub-categories, grades and forms are either not available or don’t support the industry at a commercial or quality level.

We view the TRA decision as not only detrimental to the short and medium term position of UK manufacturers, both in domestic and overseas markets, but it also risks stifling growth in emerging sectors such Green Energy.

From a wider economic position these actions only prove to act in contradiction of the Government's need to slow inflation by driving an increasing level of demand in UK.

As a business we are taking a number of actions in an attempt to influence the decision around the quota allocation.

  • We are closely monitoring, and actively seeking input into the TRA case file ‘Transition Safeguarding Review (TF0006)’ in relation to the review of quotas applied to Category 12 products (amongst others).
  • We are working with local MP’s, giving our strong response, views and commentary regarding the quotas impact to UK businesses and manufacturing.
  • We are also backing requests from our European suppliers in challenging the safeguarding measures in an attempt to protect availability of product to UK manufacturing.

If you have any questions, or would like to discuss further, don’t hesitate to get in touch.