The Commission first suggested extending the safeguards and adjustments to HRC and wire rod quotas in May 2024.
The new safeguards and adjustments will come into force on July 1 and will remain in place until June 30, 2026, according to the amended regulation, published in the Official Journal of the European Union on June 25.
The new safeguard adjustments envisage that the annual liberalization rate will change to 4% from 1%. In addition, a 15% cap per country over the TRQ volume initially available in each quarter will be introduced for HRC and wire rod.
For instance, HRC imports in 2023 from Taiwan to the EU amounted to 1.25 million tonnes; from Vietnam 1.16 million tonnes; and 1.09 million tonnes came from Japan, according to GTT stats.
The total allowance for “other countries” safeguards category that covers these countries was 3.7 million tonnes in 2023, according to the EU customs data.
When the suggested 15% cap is applied, each country would not be able to supply more than 555,555 tonnes of HRC per year to the European trading bloc.
Sources told Fastmarkets that Asian HRC suppliers had not been particularly active recently and that they were probably awaiting the start of July to have more clarity on quota allocations.
Fastmarkets’ weekly price assessment for steel hot-rolled coil import, cfr main port Southern Europe, remained steady at €600-610 ($641-652) per tonne on Wednesday, unchanged since June 19.
The changes are expected to limit imports of HRC to the EU and immediately after the announcement of the 15% cap on residual HRC quotas, European steelmakers even made attempts to increase domestic prices, Fastmarkets understands.
Those attempts were largely unsuccessful, however, due to the lack of demand from key steel-using sectors, leaving domestic prices for HRC in Europe broadly flat for more than a month.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €629.38 per tonne on June 26, down by €0.62 per tonne from €630.00 per tonne on the day before.
The index was down by €1.50 per tonne week on week and by €7.99 per tonne month on month.
Eurofer welcomes extension of safeguards
The European Steel Association, Eurofer, welcomed the adoption of the new safeguard adjustments, but it warned that the period for which the measures would be applied would be insufficient to solve the problem of an oversupplied global market.
“We welcome the extension of the EU steel safeguards [because] the import penetration situation today is even worse than [it was] six years ago when the process was initiated. This problematic evolution has been fueled by worsening global excess capacity, which now stands at four times the size of EU steel demand,” Eurofer director general Axel Eggert said.
According to Eurofer data, the global steel market saw excess capacity increasing by nearly 50 million tonnes, from 514 million tonnes in 2019 up to close to 560 million tonnes in 2023.
“According to the Organization for Economic Development (OECD), approximately 158 million tonnes of new capacity is potentially coming on stream until 2026, while steel demand is currently growing by only around 36 million tonnes per year,” Eurofer said.
Eggert said that Europe had become a favorite export market for carbon-intensive excess capacity, despite the trade bloc striving to be a world leader in the decarbonization drive.
“This is a structural problem that poses an existential threat to all EU clean-tech value chains at a crucial time for our transition,” he said. “The safeguards will cease in just two years from now. We need to find a new, long-term solution to address this situation,”
Eurofer said the surge in EU imports has been driven by exporting countries where steel capacities have expanded most significantly, notably in Southeast Asia, parts of the Middle East and in North Africa – regions, where increasing capacity far exceeds local demand for steel.
“These expansions are fueled in part by investments from China and partly through local investments, often with explicit export objectives,” Eurofer said, adding that European institutions should act to tackle excess global capacity as a matter of urgency.
