EU quota cap eyes supply diversity

The EU has confirmed it will impose from 1 July a 15% cap for the residual hot rolled coil and wire rod tariff-rate quotas (TRQ) to ensure diversity of supply.

This was announced by the European Commission together with the extension of safeguard measures to 2026.

In the case of hot-rolled flat steel, representing 31% of total safeguard imports in 2023, the product is crucial for EU downstream production including cold-rolled flats and metallic coated steel, the European Commission (EC) says.

However, the rapid exhaustion of its residual TRQ starting from October 2023 led to heightened import pressure, particularly from new entrants like Vietnam and Egypt. This influx, accounting for over 45% of imports in this category by end-2023, squeezed out historically present suppliers.

Therefore, the EC implemented an adjustment by capping individual country exports under the residual TRQ at 15% of the quarterly volume. This aims to stabilise the market, mitigate import pressures, and ensure fair access for both EU users and exporting countries, without compromising product availability or industry performance, the Commission says.

Wire rod imports into the EU also faced significant disruption in its residual TRQ due to a sudden shift in import patterns. Until mid-2023, various countries like Algeria, Bosnia, Korea, and Japan were utilising the TRQ fairly evenly, maintaining stable trade flows.

However, starting from Q3 2023, Malaysia and Egypt emerged as major exporters to the EU under this TRQ, despite having negligible prior presence. Their combined share of imports surged to 76%, drastically reducing opportunities for smaller, traditional supplying countries like Bosnia and Japan, which saw their TRQ utilisation drop to minimal levels.

The EC has therefore sought to prevent the excessive dominance of new entrants and safeguard access for smaller exporting countries that were previously reliable suppliers. The cap allows affected countries like Malaysia and Egypt to continue exporting volumes higher than historical levels, while ensuring sufficient diversity of supply sources for EU users, the Commission explains.

Elina Virchenko UAE

kallanish.com