European steel end-user associations have expressed concerns regarding the negative impact the proposed tougher alternative to safeguard measures will have on the EU’s downstream manufacturing industries, according to a joint statement released on 6 January.
The statement was signed by 10 associations, including European Automobile Manufacturers’ Association (ACEA), Home Appliance Europe Association (APPLIA), Metal Packaging Europe Association and the Committee for European Construction Equipment (CECIMO).
The European Commission released its official proposals for the replacement of the EU’s steel protection framework on 7 October last year, detailing extensive cuts variable across product category volumes – detailing the CN code categorization of steel products and their respective allocation of the overall quota volume of 18,345,922 tons – a total reduction of 47%. And the tariff-rated quotas were proposed at 50%, compared to safeguard duties currently in place of 25%.
The new measures are expected to come into effect in July 2026, after the expiry of the current safeguard system.
While the associations acknowledge that certain protectionism in needed to tackle the effects of global overcapacity and to secure a level playing field, they strongly oppose the proposed parameters of the measures and believe that the Commission might “go too far in ring-fencing the European market.”
The significant reduction of the quota volume, combined with the doubling of tariff-rated duties to 50% means that more imports will fall outside the allocated quotas and end-users will have to “shoulder between 5 and 9 billion Euros a year in extra tariff costs,” according to the associations, assuming import volumes similar to those in 2024.
The groups estimate the resultant increase in steel prices could be far higher than the 3.25% average forecast by the European Commission. Price increases could reach up to 30% in certain product categories, hitting both importers and companies that rely on exports of finished goods from the EU, they warned.
And the introduction of a “melt-and-pour” rule will further increase the administrative burden on smaller companies. “Obtaining origin information for low-value consignments will be practically impossible. Such a burdensome rule needs to be implemented in a much more careful and practical way and phased in within realistic timelines,” the statement said.
Under the proposed system, the specialised, high-quality steel imports needed for complex industrial applications will be significantly harder. Such products are often manufactured only by a handful of exporters globally and there is no sufficient supply from within the EU.
In addition, the effects of the Carbon Border Adjustment Mechanism (CBAM) and the phaseout of free EU ETS (Emissions Trading System allowances) will drive costs up for both imported and domestic steel and it will have a cumulative impact on the competitiveness of European downstream industries.
European buyers of imported steel have already started to look for domestic alternatives to imports due to the effects of CBAM and have been buying imports via big traders on a DDP basis instead of CFR, paying higher prices to protect themselves from risks of paying higher CBAM duties.
