EU to propose steel safeguard replacement in September
The European Commission plans to unveil proposals for alternative steel safeguard measures in September this year, to replace the current measures which are due to expire on 30 June 2026, the Commission said in updates to its Clean Industrial Deal on 2 July.
The EU has already tightened the existing steel safeguard measures from April this year to protect the industry from a flood of imports diverted to the EU.
The steel industry requires protection from imports diverted to the EU from their usual outlet markets following the rise of Section 232 tariffs in the US and generally stricter trade policies in the country. In early June, the US authorities doubled tariffs on imported steel and aluminum to 50%.
Decarbonisation requires higher circularity, but scrap recycling in the EU has been on the decline due to a rise in export sales caused by higher prices outside the EU.
European mills have made plans to replace existing blast furnaces with less carbon intensive electric-arc furnaces (EAFs) as part of their decarbonisation route. EAFs use either ferrous scrap or direct-reduced iron as feedstock.
To learn more about the decarbonisation plans of EU steelmakers see McCloskey’s European Green Steel Profile.
The Commission has made data on scrap trade from the Customs Surveillance database publicly accessible as a part of a broader monitoring mechanism for imports and exports of non-ferrous goods and steel. This will help the adoption of new trade measures needed to ensure the sufficient availability of scrap in the EU.
European steel association Eurofer and European Aluminium association urged the Commission at the end of last year to take actions to tackle scrap leakage. The statement was met with criticism from the Bureau of International Recycling (BIR).
Steel exports under CBAM
EU industries remain exposed to unfair international competition, particularly as free allowances under the EU Emissions Trading System (EU ETS) will phase out from 2026 to 2034. Implementation of the Carbon Border Adjustment Mechanism (CBAM) will help prevent carbon leakage for imports, but exports from the EU would suffer as manufacturers in non-EU countries do not face similar carbon costs.
To tackle the risks related to exports, the Commission has proposed using the revenues generated by CBAM – which will be extended – to support production at risk of carbon leakage.
“This would allow the affected producers to be compensated proportionally to the phasing out of the free allowances subject to deliverables on long-term decarbonisation. The scope will need to be established based on objective criteria,” the Commission said.
The proposal will be put forward at the end of 2025 and will be subject to review in 2027.
At the same time the scope of CBAM was proposed to be expanded to downstream goods and introduction of anti-circumvention measures.
EU steel quotas reflect shifting trade dynamics after US tariffs
On the first day of the new EU quota period from July 1 to September 30, some of the import quotas for certain steel products such as HRC, CRC, metallic coated sheets, organic coated sheets and tin mill products, allocated for certain countries like Taiwan, Turkey, Vietnam and China have already been exceeded with products waiting for customs clearance, while over 60 percent of quotas for some steel products have been used up.
Some import quotas for certain steel products have been used rapidly, while the usage of some quotas has declined compared to the beginning of the previous quota period from April 1 to June 30.
The exceeded quotas can be seen in the table below.
| Product | Country | Amount (mt) | Awaiting (mt) | Used (%) |
| HRC (1A) | Taiwan (under other countries) | 112,716 | 128,722 | 114.2 |
| CRC | Turkey (under other countries) | 43,989 | 47,928 | 108.95 |
| Metallic coated sheets (4A) | Vietnam (under other countries) | 119,428 | 152,277 | 127.51 |
|
Metallic coated sheets (4B) |
China | 129,758 | 152,655 | 117.65 |
| Vietnam (under other countries) | 21,207 | 30,702 | 144.77 | |
| Organic coated sheets | Vietnam (under other countries) | 10,843 | 59,738 | 550.94 |
| Tin mill products | Turkey (under other countries) | 7,510 | 15,409 | 205.18 |
| Stainless hot rolled quarto plates | China | 4,974 | 5,214 | 104.83 |
| Stainless bars and light sections | China | 1,302 | 1,747 | 134.18 |
| Wire rod | Algeria (under other countries) | 15,255 | 31,410 | 205.9 |
| Angles and sections | Turkey (under other countries) | 10,243 | 10,503 | 102.54 |
In addition, SteelOrbis sees both upward and downward trends in quota usage in the current period compared to the previous quarter. South Korea has used up 70.55 percent of its 163,077 mt HRC (1A) quota, although the country had used up only 44.73 percent of the quota in question at the beginning of the previous quota period. India has used up 64.44 percent and 61.64 percent of its 54,279 mt metallic coated sheet (4A) and 79,534 mt organic coated sheet quotas, respectively, while the country’s usage of the given quotas was at 122.72 percent and 83.53 percent, respectively, at the beginning of the previous quota period. Meanwhile, India has used up 93.91 percent of its 32,114 mt of stainless bars and light sections quota. SteelOrbis assumes that changes in quota usages reflect certain market developments such as trade diversion resulting from the recently introduced US tariffs, lower flat steel prices in the EU domestic market and consequent weak demand for import products.
Furthermore, Algeria has used up 75.44 percent of its 27,898 mt rebar quota, while 99.96 percent of the 15,255 mt wire rod quota allocated for Malaysia under other countries has been used up. 5,626 mt of the hollow section quota allocated for China has been used more rapidly at a rate of 94.21 percent, compared to 31.16 percent at the beginning of the previous period.
EU opens public consultation on CBAM to extend scope and prevent loopholes
The European Commission (EC) has announced that it initiated a public consultation process on the Carbon Border Adjustment Mechanism (CBAM), aiming to close critical loopholes and enhance its effectiveness.
The consultation, open until August 26, seeks feedback on extending CBAM to downstream products, introducing additional anti-circumvention measures, and revising electricity emissions accounting rules.
These steps are designed to reduce carbon leakage and improve CBAM’s ability to drive meaningful climate action – both inside and outside the EU.
Key goals of the consultation:
| Area of focus | Objective |
| Downstream Products | Prevent carbon leakage in supply chains |
| Anti-Circumvention | Stop manipulation of product classifications to avoid CBAM charges |
| Electricity Emissions | Reflect decarbonization efforts of non-EU countries more accurately |
The EC is concerned that carbon leakage – where companies move production to countries with laxer carbon rules – may shift to later stages of the supply chain. Without extending CBAM, EU-based manufacturers with lower carbon footprints risk being undercut by carbon-intensive imports. This undermines climate goals and industrial competitiveness.
Another focus is addressing circumvention tactics, such as slight modifications to covered goods to reclassify them as non-CBAM items, routing production through intermediate countries to avoid charges. The EC proposes tighter classification and reporting rules to ensure genuine compliance.
Currently, emissions from imported electricity are calculated using default values based on fossil fuels. However, this fails to recognize actual decarbonization progress in exporting countries. Although importers may opt to report actual emissions, the current requirements are complex and sometimes unworkable, involving power purchase agreements, capacity nominations, grid congestion metrics. These conditions may inadvertently discourage decarbonization in non-EU regions by penalizing clean electricity producers who cannot meet the rigid criteria.