Local steel buyers protest Economy Ministry quotas

Major steel buyers, including the automotive and electrical goods industries, are concerned that quotas introduced last week by the Economy Ministry to protect domestic steel manufacturers from growing imports will increase their costs and make their products less competitive abroad. In June, the steel industry appealed to the go-vernment for protective measures against a growing tide of cheap steel imports diverted to the Polish market by high U.S. tariffs. Imports of steel grew to 46% of Polish steel sales in 2001, threatening the country's increasingly fragile steel industry, which saw output fall by 11.3% in the first quarter of this year, according to Metallurgical Chamber of Industry and Commerce (HIPH) figures. The measures have angered steel importers, who fear that tariffs will eat profits and make their companies less competitive. "If the quotas prove insufficient, we will have to deal with the results of increased production costs, said Jan Halaś, the director of production at Wrocław electrical goods firm Polar. "This will make us less competitive domestically and (more) important, on foreign markets (since) steel products represent over 10% of our costs." Protective measures for the Polish steel industry officially came into force at midnight last Tuesday. Within 28 days, manufacturers will receive an import quota based on their average import levels of 10 steel product categories du-ring the past year plus 10%. Tariffs of 11-25% will be imposed on imports exceeding the quota. The tariffs are intended as a preliminary protective measure and will be applied for 200 days. During this period, the HIPH will assess their impact on the steel industry and analyze imports of steel products before deciding which products will be included in a four-year round of tariffs.

Manufacturers of steel-intensive products, including producers of automobiles and electrical appliances, complain that the list contains products, such as galvanized steel sheets that are not available from Polish steel mills, so that exceeding their quotas will be unavoidable and increase their production costs. "We have to import sheet steel because of the low quality of Polish steel," said Lidia Holewa, the spokeswoman of Polish electrical goods manufacturer Amica. "Domestic sheet steel is too inconsistent in its chemical composition." U.S. automaker General Motors (GM) in Poland has tried to place orders with domestic mills, including Huta Tadeusza Sendzimira in Kraków, only to find that steel makers were unable to meet their specifications. "We import steel, and we will still have to import it because there are items in the tariff list that are not avai-lable in Poland at all," said Przemysław Byszewski, GM's spokesman. "This will, of course, increase our production costs, but it is too soon to tell by how much and whether it will have an impact on car prices." Manufacturers also protest the fact that the quotas will be set according to import levels from the past 12 months, when Poland saw a decreased demand for steel during an economic slowdown. "The past 12 months were not a good period for Polar and many other manufacturers," Halaś said. "Now our orders are increasing, and our new investor (Whirlpool) has plans to double our production. So, if our costs increase, we will not be able to compete on foreign markets, and these plans will become unrealistic." General Motors said that the tariff structure must be changed before the government establishes its four-year quota system. "As these are not the final tariffs, we will make efforts to have at least some of these items taken off the list," Byszewski said.