Owlett-Jaton Comment: Q3 2023

As expected, the volume downturn seen in the second quarter has continued as the construction and RM&I sectors continue to be sluggish. Reduced manufacturing costs in the Far East, together with lower shipping costs, have provided the drivers for cost price reductions, though these have been somewhat offset by the weakness of sterling against the US dollar in which both shipping and Far East costs are paid. Overall, this has led to some price deflation, which, together with the volume decline, has led to noticeably lower sales values.

Following on from the EU’s decision to tighten sanctions against the use of Russian steel, the UK has now also introduced a similar regime requiring importers to prove that the products they are importing do not contain any Russian steel, even if they were manufactured in another country. These new sanctions took effect from 30^th September 2023 and were introduced with relatively short notice.

However, the UK has adopted more of a due diligence approach to the proof required, and HMRC, who are responsible for the enforcement of the sanctions, seem willing to accept a wider range of evidence that appropriate steps have been taken to ensure Russian steel is not being used. At the time of writing, we are now a couple of weeks into this new regime, it seems to have gone in with little or no disruption to supplies.

It also seems that the EU’s stance on the required evidence is becoming more flexible, with individual customs authorities being given a degree of latitude on acceptable evidence. With Northern Ireland covered by the EU rather than the UK sanctions regime, this change has simplified movements to Northern Ireland and all indications are, that providing importers have undertaken appropriate due diligence, there should not be any supply difficulties caused by sanctions.