Protectionist policies and regulatory uncertainty are creating significant challenges for global steel trade, particularly for exporters to Europe, Stemcor managing director Europe Julian Verden told delegates at Kallanish Asia Steel Markets in Kuala Lumpur last week.
Verden said the implementation of the EU’s Carbon Border Adjustment Mechanism and evolving tariff-rate quota system are creating uncertainty for steel exporters. Asian producers in particular remain unclear about their country-specific quota allocations, while delays in verification procedures are complicating compliance efforts. Although companies have begun engaging verifiers, EU importers will likely remain uncertain about the final cost implications until next year.
The uncertainty is already affecting trade flows, with EU steel imports expected to weaken in the third and fourth quarters, potentially placing financial strain on trading companies exposed to the market.
Verden also highlighted widening regional price disparities driven by protectionism. Steel prices in the US remain significantly higher than in Europe, with US hot-rolled coil trading above $1,200/tonne compared with around $800/t in Europe.
While tariffs may support domestic prices, European steelmakers risk losing global competitiveness due to higher costs and restrictions on exports. Value-added products could face a smaller impact from tariffs, though developing such markets requires additional investment, product adaptation and new customer relationships.
“TRQs, which are the quotas for Europe, are going to be 18 million tonnes starting on the 1st of July. The problem for countries all over the world, particularly in Asia, who have traditionally been significant importers into the EU, is that they don’t know what their individual country quotas are going to be,” Verden added.
Looking ahead, Verden warned the third quarter could prove particularly volatile for traders. Shipment delays linked to geopolitical tensions and disruptions in Gulf trade routes, combined with buying strategies aimed at securing larger quotas before new restrictions take effect, may result in severe financial pressures. Some trading companies could face unexpectedly high costs and losses during the period, potentially leading to “casualties” among market participants.
XSteel trading director Virgilio Lozano meanwhile told delegates that US protectionist policies continue to shape steel trade flows across the Americas. Section 232 tariffs have been raised from 25% to 50%, with the possibility of further increases, reinforcing barriers to imports; consequently, US mills have achieved 80% capacity utilisation.
At the same time, trade tensions persist with Latin America and Asia, while tariffs imposed by Mexico on non-FTA countries are redirecting Asian steel shipments towards other markets in the region. Lozano noted that Latin America remains a major destination for imported steel, with annual imports of around 80 million tonnes, creating opportunities for exporters as trade flows continue to shift.
Author: Burak Odabasi
