EU looking at firm actions if US S232 measures go ahead

The European Union is considering taking action in response to the US’s Section 232 investigation against steel imports, should this go ahead, as it could have a “disastrous” impact on world steel trade, said speakers at S&P Global Platts’ European Steel Markets conference in Barcelona Monday.

“We can expect some degree of firmness by the EU in this case: we are looking at all potential options at this time,” said Francisco Perez Canado, head of unit of market access, industry, energy and raw materials of the European Commission. “In a global role you need global rules.” The actions could include WTO or bilateral action, he said.

“A more symmetrical approach is needed by China and others in a world that has gone beyond a tipping point,” to create the conditions for a healthy steel industry, Perez Canado said.

The 232 investigation, on which a decision or announcement is expected this week, is examining whether the US’s imports of steel products constitute a threat to US national security.

Jeroen Vermeij, European steelmakers association Eurofer’s director for market analysis and economic studies, and Henrik Adam, chief commercial officer of Tata Steel Europe, both expressed the EU industry’s deep concern over the Section 232 investigation. The speakers pointed out that this could bring the US into conflict with its World Trade Organization obligations and misses the fundamental problem of continuing overcapacity in the world steel industry.

“We call for governments and the commission to apply WTO rules… to create a fair scenario for EU steel industries,” said Adam. “26 million metric tons of steel could float around the world if Section 232 goes ahead; this will be a huge risk for the European domestic steel industry and a risk to US (steel) users. Trump is looking to aid US steel companies… it’s not about protecting national security: it’s about saving US industries.”

For Eurofer’s Vermeij, if Section 232 measures go ahead, this may give US authorities “unprecedented powers”, and have a “disastrous impact” on trade, even if there were to be product or country differentiation, “as foreign suppliers would turn massively to the EU.” At present just 15% of the EU’s steel exports go to the US and these exports are on a falling trend, he said.

“Only coordinated action at an international level can address the global steel market’s problems,” said Vermeij, highlighting that the main problem is of overcapacity, put by various speakers at the event at between 300 million mt and more than 700 million mt. The speakers noted that the OECD steel forum, comprising 33 countries including China, will meet in Hamburg alongside the G-20 summit next month to review advances made in tackling overcapacity and discuss how to advance in this area.

Yuriy Rudyuk, a partner in law firm Van Bael & Bellis, said that if Section 232 measures are imposed, this “may change the scenario altogether: protectionism could become even more evident.” This could also have a domino effect: if applied for steel today, aluminum or other products could be next, he said. Also, other major markets including the EU may take actions in response, by initiating their own safeguard investigations against likely import diversion, as was the case in the year 2002, the lawyer said.

Timothy Gill, chief economist of the American Iron & Steel Institute noted that US imports of steel rose to their highest volume terms in 2014 and 2015, reaching a share of some 34% of apparent demand in 3Q 2015 – at the same time that the US steel industry’s shipments and employment levels slumped – before receding to some 26% in Q1 2017.

“Trade cases have helped,” he said. However, imports are still not yet down to their historic levels and finished product imports have in fact risen again in the year to date, being up 23% over the same period in 2016, he said.

Diana Kinch, PLATTS