EU safeguard extension clouds already ‘perturbed’ market

The European Commission’s opening of an investigation into the possible extension of EU safeguard measures beyond June this year is adding “further layers of uncertainty and volatility in an already nervous and perturbed market”, says Georges Kirps, a Steel Business Consultant.

The senior industry observer and now steel consultant tells Kallanish the Commission should take into consideration the risk of other countries retaliating to the measures being extended, which could hurt European steel exports in future.

Moreover, in the US, more and more voices are being raised against Section 232 tariffs, which were the original justification for EU safeguard measures. More importantly, though, the market is currently suffering from a severe lack of supply and safeguard measures are exacerbating the problem, Kirps says.

“The fact is that the latest market data confirm that EU steel producers have not been in a position to comply with steel demand in the EU in a way to at least compensate for much lower steel imports in the wake of EU steel safeguards and EU anti-dumping steel trade measures,” Kirps explains.

“Between 2018 and 2020, more than 9 million tonnes of steel imports disappeared from EU steel supply chains, meaning a downside of EU imports by 27%, in fact bringing the share of imports in EU steel market supply down from 22.5% in 2018 to 19.7% in 2020,” he adds.

A side effect of the slump in imports has also been the price rally in the market. “This mismatch [in supply and demand] has fatally resulted in significantly higher price levels,” Kirps notes. He is thereby voicing the concerns of a number of steel end user associations across Europe.

The European Commission has said a decision on the possible extension of measures will be taken by June.