Fernando Espada highlights the threat of Steel Derivatives at UAHE Webinar
On 1 October, EUROMETAL Vice-President Fernando Espada participated as a keynote speaker in a webinar organized by the Unión de Almacenistas de Hierros de España (UAHE), as part of its ongoing “Perspectivas del Sector” online conference series.
In his presentation, Fernando Espada addressed the rising uncertainty facing the European steel sector, pointing to the urgent need to tackle the growing impact of imported steel derivatives.
He presented recent research conducted by EUROMETAL showing the increase of steel derivatives imports, creating serious risks of carbon leakage, unfair competition, and the erosion of Europe’s industrial base.
Espada stressed that trade policy must evolve to reflect the complexity of modern supply chains, where downstream products can circumvent existing trade defence instruments. The presentation echoed EUROMETAL’s broader call for measures such as extending CBAM and trade defence instruments (TDIs) to steel derivatives.
EUROMETAL thanks UAHE for the opportunity to contribute to this timely debate.
EC steel draft to slash quotas, hike tariffs
The European Commission’s draft proposal to replace the bloc’s steel safeguard system seeks to revolutionize existing temporary protections into a new permanent law, according to internal Commission documentation seen by McCloskey.
The proposals include significant restrictions to quota volumes, a 50% out-of-quota tariff on steel imports, and the introduction of a “melted and poured” mechanism.
Commission drafts call for a Recommendation for a Council Decision, as well as a Proposal for a Regulation of the European Parliament and Council, which will outline the EC’s intentions for a long-term steel protection mechanism. The documents are deemed “sensitive” – to be distributed on a “need to know” basis only – and when read together illustrate the European Commission’s plan to conduct a large-scale rework of its current steel safeguard, without falling foul of the bloc’s commitment to World Trade Organisation (WTO) rules.
The Commission is recommending three key changes:
- Significant restrictions to steel import accessibility, aiming to approximately halve total quota volumes to reduce import market share to a 13%. and removing elements such as the carrying-over of unused quota.
- A doubling of the existing out-of-quota tariff rate to 50% ad valorem.
- The introduction of a “melted and poured” principle, including obligations on importers to prove the origin of their steel.
It is important to note that the draft proposal is exactly that – a draft – and could be subject to changes prior to unveiling of the official proposal (indicated to occur in the near-term) as happened with the European Steel and Metals Action Plan (SMAP) as reported by McCloskey in March.
The WTO framework, and turning the safeguard upside down
The EU’s primary existing steel protections take the form of a safeguard system, which under the WTO framework essentially allows the bloc to impose additional tariffs to its base tariff rate on its imports in certain circumstances.
Safeguard tariffs can only be applied when when the volume of the relevant imports have increased and when an increase in imports is causing, or threatens to cause serious injury to domestic industry. These protective safeguard measures must be introduced on a temporary basis, and cannot exceed a total lifecycle of eight years.
Having identified these issues resulting from overcapacity-related trade displacement after US President Trump introduced section 232 tariffs on US steel imports during his first term, the European Commission established the current steel safeguard system in 2018 – introducing country-specific and residual tariff-rate quotas (TRQs) for specific countries in line with the EU’s historic supply chains and trade flows, imposed on top of the bloc’s base rate for steel imports, which is generally 0% or “free” for primary steel.
The safeguard must expire at the end of June 2026, when it hits its eight-year deadline.
However, as identified in the Steel and Metals Action Plan (SMAP) back in March, the threat or reality of injury to the EU’s steel industry has certainly not been remedied over the course of the last eight years as overcapacity and trade displacement effects have compounded, and much industry campaigning has been premised on the idea that the protections have been insufficient in both facilitating the investment case for the decarbonisation of European steelmaking, and its fundamental competitiveness and survival.
These arguments resulted in tighter safeguards in the first quarter, and the Commission’s commitment under SMAP to formulate a long-term replacement for its steel protections before the end of the year.
The draft proposal appears to turn current protections on their head in an attempt to preserve EU adherence to WTO rules whilst allowing long-term, or even permanent steel tariffs to exceed the eight-year maximum term.
Rather than applying a 25% out-of-quota duty in addition to a 0% or minimal base rate; the base rate will effectively hike to 50%, unless imported duty-free under the relevant quota.
This would be a dramatic change: one requiring the Commission to seek European Council authorization to open consultations with other WTO members to negotiate this proposed modification to its “import tariff concessions” to 50% for steel products. Such changes would typically oblige the EU to offer said members equivalent compensation, such as the lowering of other tariff barriers to maintain trade equities.
The Recommendation for a Council Decision represents these efforts in the Commission’s draft documentation and its provisions interpret both the negotiation of tariff-rate reductions on other products and potential retaliation from other WTO members should negotiations fail, as compatible with existing EU law.
Resetting the European steel market under a new protection framework
The Commission’s other draft document proposes a new EU law to set the 50% rate, which would require agreement from both the European Parliament, and Council.
The draft is only partially complete and lacks annexes detailing country-specific quota levels, and the specific categorization of steel CN codes into product groups, but what provisions are present in the draft describe significant cuts to EU steel import volumes.
Global steel overcapacity plays a central role, not only as a primary factor facilitating the import-related injury to the EU’s domestic steel industry, but also in troubled trade negotiations with the US. It is therefore, unsurprising that the European Commission is looking to reset the import market to a time before overcapacity was such an issue.
The Commission sees 2013 volumes as a suitable benchmark, when imported steel accounted for 13% of the EU market. Based on consumption in 2024, the most contemporary annual reference, the EC is proposing total import quota volume of 18.35 million tonnes.
This total quota volume would be distributed across steel product categories proportional to 2022-2024 imports, though the annex detailing product categories, and any potential changes to CN code groupings are not included in the draft.
McCloskey’s initial calculations comparing existing steel quota volumes to the Commission’s proposals indicate an overall reduction of around 45%. Based on import data reported by Eurofer for 2022-2024 volumes, actual volumes could be cut by 30%.
Predicting quota country-specific allocations is harder. The Commission mentions a number of factors that could determine a nation’s quota. According to the Commission, these include “existing and future free trade agreements”, agreements “addressing the levels of global overcapacities”, and historic allocations.
Notably, the Commission includes references to the WTO negotiations in order to enact permanent protective measures compatible with multi-lateral trade agreements, which could encourage third countries to support the changes.
“Melted and poured”, and other technical changes
Perhaps the part of the proposal that could have the largest effect on global steel trade flows, if effectively implemented, is a provisions for a “melted and poured” clause. This essentially links the origin of imports and therefore what quota it falls under, to the nation where the steel was originally produced.
The initial draft of SMAP included implementing an immediate “melted and poured” clause, but this was toned down to a priority consideration in the final version.
Under the new draft proposals the origin of steel is defined as “the original location in which raw steel and iron is initially produced in liquid form within a steelmaking or iron making furnace and subsequently cast into its primary solid state.”
According to the Commission, “this primary solid state may encompass either a semifinished product, including but not limited to slabs, billets, or ingots, or a finished steel mill product.”
The draft proposals include new, but as yet, undetailed, provisions obligating importers to “provide appropriate evidence” at the “moment of importation.” The Commission offers the example of mill certificates as possible evidence.
Among the more technical changes – summarised in the below table – the draft proposal removes any carry-over mechanism for unused quota volumes quarter-to-quarter, but does introduce a twenty-working day grace period for allocating import volumes to the quotas in the previous quarter.
Comparison of Proposed and Existing EU Steel Import Measures
| Framework Element | Proposed Framework (draft regulation/decision) | Current Framework (steel safeguard) |
| Out-of-Quota Duty Rate | 50% ad valorem. | 25% ad valorem. |
| Total Annual Quota Volume | A fixed volume of 18,345,922 tons. | Based on historic trade flows (traditional trade flows), subject to a progressive liberalisation increase yearly. |
| Overall quota volume is based on the equivalent of the import share in 2013, adjusted to 2024 consumption rates. | ||
| Quota volumes per product category is based on the share held in 2022-2024, specified in annexes not included in the drafts. | ||
| Basis for Quota Volume Calculation | Calculated by applying the import market share that prevailed prior to the impact of global overcapacity (around 13% market share in 2013) to the overall consumption in 2024. | Based on export performance in a historical reference period used in the original investigation, maintaining traditional trade flows. |
| Unused Quarterly Quota Carry-over | Unused tariff quota volumes in one quarter will not be carried over to the next quarter. | Automatically carried over to the next quarter, except in certain categories (as of April 2025) with sufficient import pressure. |
| Allocation to quota in each quarter permitted until twentieth working day after the end of the quarterly period. | ||
| Country of Origin | Introduction of a “melted and poured” principle. | Traditional rules of origin apply. |
| Country-specific quotas | Specified in Annexes not included in the drafts | A mix of country-specific and residual quotas |
Benjamin Steven Journalist, Steel
Maria Tanatar Associate Director, Steel and Green Steel
French long prices remain broadly steady
French steel prices remain largely stable, though uncertainty and subdued volumes continue to dominate the market, Kallanish notes.
Producer capacity currently exceeds consumption not only in France but also in Spain and Italy, where long product stocks remain elevated.
Producers’ margins are already under pressure from high costs, and further reductions in production rates are expected to weigh heavily on their 2025 financial results.
For now, French steel prices remain broadly flat compared with early September, with some products seeing moderate declines. Downstream, distributors report steady activity during September but continue to face strong pressure on margins.
“Every time we try to raise prices we lose orders. We also lose business to cheaper material imported from Italy and Spain,” one source says.
Profitability concerns are deepening, and together with competition from lower-priced imports, domestic French values have struggled to gain ground.
Stocks are reportedly rising throughout the entire value chain, although one distributor notes that his sector is opting to keep inventories thin. Overall, both end-users and distributors continue to prefer smaller, more frequent orders rather than committing to large volumes.
Current market volumes remain insufficient to offset the impact of thin margins. Foreign merchant bar producers have re-entered the market with aggressive offers, adding further pressure on domestic suppliers.
Merchant bar prices are holding steady at €210–230/tonne ($247-271/t) base delivered, excluding size extras. Rebar values also remain unchanged, averaging around €600/t delivered, with sales limited to relatively small lots. Sections are similarly stable at €750/t delivered.
A buyer and a seller both note that consumption of sections has been relatively healthy over the past three weeks.
Natalia Capra France
EU bans steel trade with Iran
The EU has reinstated sanctions on Iran, directly targeting the steel and metals trade amongst others, Kallanish notes.
The measures ban the sale, supply, transfer or export of graphite and raw or semi-finished metals – including aluminium and steel – to Iranian entities or for use in Iran. Imports of these materials from Iran are also prohibited, according to the Official Journal of the European Union.
Contracts involving steel and related metals signed before Tuesday may still be executed, but only until 1 January 2026.
For the steel industry, the measures effectively end formal EU-Iran trade in semi-finished steel and related inputs.
The scope extends beyond physical trade, covering financing, brokering, insurance and technical assistance linked to steel and other restricted metals.
The European Council notes that steel and other metals can contribute to Iran’s nuclear, ballistic missile and military programmes, or support industries controlled by the Islamic Revolutionary Guard Corps.
July’s EU billet imports from Iran totalled 22,602 tonnes versus zero last year.
Elina Virchenko UAE
Italian unions demand state action as Stellantis downsizes
The Italian automotive sector is facing a sustained contraction in output and an increasing reliance on state-backed furlough schemes, as Stellantis continues to scale back both production and employment. According to a study on Stellantis conducted by the Fiom-Cgil union and seen by Kallanish, the trend, described as a strategy of “escaping Italy,” highlights a diminished role of the country within the group’s European industrial strategy.
The automaker has downsized its workforce in line with reduced production volumes in recent years. Union data show headcount falling from 37,288 employees in 2020 to 27,632 in 2024. Over two decades, Stellantis’ car and light commercial vehicle production in Italy has been cut by nearly half. Total output fell from almost 1.2 million units in 2004 to just 659,000 in 2024. The contraction is equally stark in powertrain operations, where engine production volumes declined by 534,700 units over the same period across the group’s Italian plants.
A further sign of Italy’s diminishing role is the allocation of new models. Despite several recent launches in the mass-market segment, none are being manufactured domestically. The Fiat Topolino is built in Morocco, the Fiat 600 and Alfa Junior in Poland, the new Panda in Serbia, and the new Lancia Y in Spain.
Fiom-Cgil argues that Stellantis’ shrinking output in Italy cannot be explained solely by weaker demand. The union points to a steady erosion of the group’s market share both domestically and across Europe. In Italy, Stellantis’ share dropped from 35.23% in 2022 to 29.13% in 2024. The downward trend continued into 2025, with first-half figures showing a further decline to 29.2%, compared with 32.1% in the same period of 2024.
Ceo Antonio Filosa “has inherited a dramatic situation, the result of the failed strategy of Carlos Tavares and the company’s ownership,” Fiom-Cgil secretary general Michele De Palma says in the report. “We are calling for a direct dialogue with Filosa to define an industrial plan that must include new mass-market models, as those announced so far are insufficient to keep plants running at capacity.”
Italy is working with automotive association Anfia and Stellantis to relaunch the sector and boost production to 1 million vehicles per year by 2030. The so-called “automotive roundtable” promoted by the Ministry of Enterprises and Made in Italy (Mimit) has so far delivered only purchase incentives, which are incapable of addressing the structural crisis in the sector. Real industrial policies are necessary to protect and relaunch the automotive sector, also encouraging the new manufacturers to invest.
“Without new investments, it will be impossible to revive car manufacturing in Italy. At the European level, we are calling for a special public fund to help the industry emerge from the crisis and to boost not only research and development but also production and employment,” De Palma says. This should include the option for member states to acquire equity stakes in companies while public resources should be made available exclusively to firms that do not lay off workers or relocate production.
Stellantis is set to pause production at several European plants in response to weak car demand and the downturn in the European automotive sector. The stoppages, scheduled between late September and October, will last from one to three weeks depending on each site and car model. Facilities involved include Poissy in France, Pomigliano in Italy, Eisenach in Germany, Tychy in Poland, and both Zaragoza and Madrid in Spain (see Kallanish 25 September).
Stellantis was not available to comment before press deadline.
Natalia Capra France
Tata Steel signs Dutch pact on decarbonisation, health
Tata Steel Nederland (TSN) has signed a non-binding joint letter of intent (JLoI) with the Dutch government and the province of North-Holland outlining a framework for integrated decarbonisation and health measures at its IJmuiden site.
The agreement marks the first step in TSN’s transition to low-carbon steelmaking and efforts to improve the living environment around its operations, Kallanish notes.
The JLoI sets out ambitions for reducing CO₂ emissions and environmental impacts but is not yet binding. Both sides will continue negotiations toward a tailor-made agreement in the coming months, with a final investment decision subject to approval by Tata Steel’s board, according to an official statement from TSN.
The Dutch government intends to support the initiative with up to €2 billion ($2.35 billion), while TSN has applied for an additional €0.3 billion from the EU Innovation Fund. The remainder will be financed through cash flow, project debt and parent company support.
Tata Steel ceo and managing director T.V. Narendran said the deal followed two years of discussions.
“There are a lot of issues to resolve and work to be done before us,” he said, citing engineering readiness, regulatory approvals, policy clarity, and permit processes. He added that TSN is working to improve its financial performance to sustain the scale of the investment.
The project’s first phase involves decommissioning blast furnace #7 and coke and gas plant 2 and building a direct reduction plant (DRP) and electric arc furnace (EAF). Initially operated on natural gas, the DRP will later integrate carbon capture and storage, followed by a switch to biomethane or hydrogen as they become viable.
These measures could cut annual scope 1 CO₂ emissions by up to 7.2 million tonnes from the current 12.6mt baseline.
To address health and environmental concerns, TSN will implement dust, noise and odour reduction projects, including covering iron ore yards and slag cooling areas, and adding windbreaks and enclosures at pellet and sinter facilities. These shorter-term measures are expected to be completed before 2030. The company also plans to boost scrap use to 30% from 17% in 2019, enhancing circularity and lowering emissions.
Both sides have agreed conditions that could terminate negotiations, including changes to Dutch CO₂ levies, energy tariffs or steel slag policies, as well as TSN’s responsibility to resolve legacy liabilities from its coke and gas plants.
Burak Odabasi Türkiye