Slow start to 2025 adds more uncertainty: Assofermet
January has reflected the market slackness that existed before the year-end production halts, Italian trade association Assofermet says in a market note seen by Kallanish.
In Asia, despite the weakness of the Chinese steel market, few production stoppages have happened, while India ended November with a 5.8% on-year production increase. These elevated production levels in Asia represent a significant area of concern for the global steel sector.
In response to higher production costs, European steelmakers have announced price hikes on finished longs and flats, even in the face of subdued demand, particularly from the white goods and automotive sectors. The recent coil increases are supported by the diminished interest in importing material from third countries, attributed to restrictive safeguards, anti-dumping, and anti-subsidy measures.
Market participants are closely monitoring the initial actions of the newly elected US president, Donald Trump, who has repeatedly indicated intentions to enhance customs barriers as a means of safeguarding the domestic market.
“The ghost of US tariffs promised by the next occupant of the White House significantly undermines the prospects for this first quarter… Furthermore, there is great interest in the future of Acciaierie d’Italia for which the appointed Commissioners have received purchase proposals from foreign groups and national consortiums in recent days,” the note states.
In 2024 flat products experienced the most substantial declines in volume, whereas long products observed a more pronounced decrease in average pricing. Uncertainty continues to loom over Europe, especially concerning the outlook for significant economies such as France and Germany, Assofermet concludes.
Natalia Capra France
EU safeguard measures review brings steel imports uncertainty
Steel importers in the EU are braced for the effect of revisions to the European Commission’s import safeguard measures, which it aims to implement from April 1.
The Commission announced its intention to review the current quota-based system on December 18, following an application from 13 EU member states. It said that their request had been prompted by challenges faced by the EU steel sector, which had been exacerbated by increasing global overcapacity and a continued decrease in EU steel demand.
Among the potential changes is the extended application of the 15% cap on individual countries’ use of the “other countries” category’s quarterly quotas, which are currently applied to hot rolled coil and wire rod. MEPS understands that this was among suggestions made by the European Steel Association (Eurofer).
The 15% cap was introduced in July last year. At the time, MEPS reported that imports from Vietnam, Japan and Taiwan – the three largest suppliers of Non Alloy and Other Alloy Hot Rolled Sheets and Strips into the EU in 2023 – would be increasingly exposed to 25% above-quota duties.
Diversified supply chain
Import data published on January 6 showed that the three countries’ quarterly tariff-free quotas (each of 138,766 tonnes) had been exceeded; Vietnam by 9%, Japan by 56% and Taiwan by 13%. However, other countries’ quotas remained underutilised, leaving scope for importers to diversify their sources to maintain supply.
MEPS analysis indicates that many importers have already been able to diversify their supply chains. Hot rolled coil import volumes have increased since the introduction of the 15% “other countries” cap. This apparent uptick, revealed by ISSB data, helped to maintain downward pressure on hot rolled coil prices recorded by MEPS in the second half of last year.
Throughout the six-month period, MEPS research contacts reported that low-cost imported material could be readily acquired from EU ports, with tightening storage capacity a growing issue in certain locations. Against a backdrop of oversupply and heavily subdued demand across the continent, the MEPS Europe Average hot rolled coil price declined by 11.4% between July and December, from EUR643 per tonne to EUR570 per tonne.
Increased tariff rate proposed
An increase in the above-quota tariff rate, from 25% to between 32% and 41%, is among other potential changes to the current EU safeguard measures. These elevated levels were first cited in the European Commission’s modelling for the quota-based system ahead of its introduction in 2018. At the time, the Commission said that a tariff of 32% would allow 10% more imports than in 2015-2017. A tariff of 41% would, it said, serve to maintain imports at their 2015-2017 level.
The 25% above-quota tariff ultimately adopted would, the Commission stated in 2018, facilitate traditional trade alongside a 10% increase in imports. It said that this represented “a cautious approach”.
Since 2018, however, EU steel production has declined by 16%, to 126m tonnes. EU steel consumption, meanwhile, has declined by around 22%, to 127m tonnes.
Imports now account for 27% of EU supply. Furthermore, Eurofer has estimated that global steel overcapacity would exceed 560m tonnes in 2024, with OECD data forecasting that an additional 157m tonnes of carbon-intensive capacity will come online by 2026.
Despite the risks posed by global overcapacity, the European Commission will not be permitted to cut its safeguard measures’ quota volumes. WTO rules state that quota volumes must be liberalised – or increased – in each year of their application.
The Commission is expected to conclude its safeguards review on March 31. Until it reveals its conclusions, importers face uncertainty over the tariff rates they will incur in quarter two and beyond.
European sites at risk of closure, according to former EUROMETAL President
“All European steel plants are at risk” of closure by 2025 if nothing is done to protect the European steel industry, ArcelorMittal France chairman Alain Le Grix de la Salle told a parliamentary hearing in Paris on Wednesday.
“The steel industry in Europe is in crisis… I cannot today make the slightest commitment… The sites, as they are, are all at risk in Europe, and therefore in France too,” declared the head of the company before the French National Assembly’s economic affairs committee, in response to an MP who asked him if he could make a commitment that no other ArcelorMittal plant would be closed in France by 2025.
“The steel industry in Europe, and therefore in France, has entered a major and serious crisis. Global overcapacity is a structural phenomenon that is here to stay. These overcapacities currently represent 550m to 600m tonnes of annual production, i.e., four to five times Europe’s production,” he told Agence France Presse. “China alone exported 100m to 120m tonnes last year. That’s the equivalent of all European consumption,” he added.
“The United States is doing everything it can to protect its industry. That leaves Europe. Steel travels. We are not against imports. We are asking that they be limited and that they not have a devastating effect on our industries, as is currently the case. We are asking for fair conditions of competition, particularly with regard to the cost of CO2,” he added. “If Europe does not decide to protect its market from unfair competition, whole swathes of our industry will disappear in the very near future. This is not doom and gloom, it is, unfortunately, pure and simple reality.”
“The list of major restructurings and closures in Europe is growing,” he warned, citing in particular the German group Thyssenkrupp, ArcelorMittal’s competitor, which plans to cut “11,000 jobs by 2030, i.e., 40% of its workforce.” ArcelorMittal suspended its decarbonisation investment plans in Europe at the end of 2024.
Dillinger and Vattenfall sign MOU on wind projects
Platemaker Dillinger and energy group Vattenfall Europe Windkraft have signed a declaration of intent to accelerate the use of CO2-reduced steel in future wind projects.
For Dillinger, creating early demand for CO2-reduced steel is crucial to advancing investment in this technology and the decarbonisation of the steel industry, Kallanish hears from the steelmaker.
“We are investing around €4.6 billion ($4.8 billion) in the decarbonisation of our German production sites with the support of the federal and state governments,” says Stefan Rauber, Dillinger ceo.
“The fact that Vattenfall wants to implement its ambitious climate targets with this steel indicates to us the demand for CO2-reduced steel and gives us momentum for our Power4Steel decarbonisation project.”
“The use of CO2-reduced steel, especially in our offshore wind farms, is an important lever in achieving our sustainability goal,” says Samira Barakat, vice president of partnerships and business transformation at Vattenfall.
Christian Koehl Germany
Tosyalı expands investments in Africa and Europe
The chairman of Turkish conglomerate Tosyalı Holding is highlighting trends such as steel overcapacity, consumption disparities, and the impacts of climate change, emphasising the importance of adapting to global economic shifts.
Speaking on the sidelines of the World Economic Forum in Davos, Switzerland, Fuat Tosyalı discussed the company’s expanding investments in Africa, focusing on sustainable energy and local markets. He describes ongoing projects in Turkey, Algeria and Libya aimed at strengthening Tosyalı’s position as the leading steel producer in the Mediterranean, Kallanish understands.
“Because the main rule of sustainability is to have energy first, then the market,” Tosyali tells Bloomberg HT. “We are steel producers. Africa has many underground mines. The issue that concerns us is sustainability. First of all, the energy needed in the process of transitioning from mine to steel, and being able to consume the product produced in the closest geography. We are the strongest steel producer in the Mediterranean basin. On the one hand, we have investments in Turkey, and on the other hand, we have investments planned in Algeria and now in Libya.”
Noting an acquisition made in Spain last year, Tosyalı reveals plans to acquire a new asset in Europe worth approximately $500 million.
“Our steel production capacity has reached a point where we now need to make new investments that will deliver our products to the end consumer,” he comments. “This purchase will be a major investment, potentially reaching approximately $500 million in Europe.”
Tosyalı is also chairman of Turkey’s electric car producer Togg’s board of directors. He states that, after taking over Togg’s management, the leadership decided to increase production rapidly and plan to double production this year compared with last.
Elina Virchenko UAE