Assofermet: EU safeguard revision means significant HRC shortage

The EU’s residual safeguard quota revision will trigger an annual shortage of 1.63 million tonnes of steel in the bloc, warns Italian steel trade association Assofermet.

The European Commission announced in May its intention to extend safeguards by a further two years to 30 June 2026. It will also introduce a 15% cap per origin over the “other country” tariff-rate quota (TRQ) for hot rolled coil, to ensure market stability and avoid crowding out traditional suppliers.

The future shortage would have “catastrophic repercussions” on several steel-consuming sectors, including automotive, construction, mechanical engineering and the entire manufacturing industry, which will see companies lose competitiveness, Assofermet warns. In 2023, Vietnam, Japan, Taiwan and Egypt, the origins in the “other country” TRQ, sold 3.9mt of HRC to Europe. The annual flow from the four countries to Europe would decrease to 2.26mt, “effectively wiping out 1.63 million tonnes of steel”, Assofermet says.

“These are steel grades that are not available in sufficient quantities in the European Union. For this reason, imports are necessary in order to guarantee the sector the supply it needs … Maintaining the safeguard for another 24 months implies an overlap with the Carbon Border Adjustment Mechanism (CBAM), which will generate de facto double taxation,” comments Assofermet president Acciai Paolo Sangoi.

The association notes that the safeguard revision is based on the comparison with figures gathered over the three-year period of 2015-2016-2017. Such a comparison is no longer up to date, as several countries that were listed as EU suppliers are now under embargoes or sanctions, or are shipping material to other geographical areas. The consequences of the amendment could be uncontrolled increases in raw material costs due to duties, long waits for customs clearance at the beginning of the each quarter, financial strains for all importers and port terminal congestion.

According to EUROMETAL data elaborated by Assofermet, in 2023 Vietnam exported to Europe 1,113,000t of HRC. The association’s projection for Vietnam’s annual shipments following the amendment is 567,399t, with an annual shortage of 545,601t. Last year, Japan exported to the EU 1,058,000t, but it will be allowed to export half of this next year, about 567,399t, with an annual shortage of 490,601t.

In 2023, Taiwan supplied 1,016,000t. After the safeguard renewal, it will be allowed to sell no more that 567,399t, representing a future annual shortage of 448,601t. Last year, Egypt sold 720,000t to Europe, which will decrease in 2024 to 567,399t, with an annual shortage of 152,601t, Assofermet concludes.

Natalia Capra France