EU safeguards detaching fast from reality of steel trading: Van Bael & Bellis

The European Union’s safeguard measures are becoming increasingly detached from the current business reality of steel trading, according to Yuriy Rudyuk, the Brussels-based partner at law firm Van Bael & Bellis.

Safeguard measures are a hot topic as the European Commission’s update on the steel import safeguards are expected within days for the new regime to become effective by July.

The tariff rate quotas were introduced in 2018 to curb trade deviation following the former US President Donald Trump’s introduction of 25% tariffs on steel product imports under Section 232 legislation in March that year.

However, since the safeguards were put in place, the market has changed, with the EU and US not only reaching an agreement to eliminate the Section 232 legislation at the end of 2021 and agreeing on tariff-free quotas to trade steel and aluminum, but also increasing the use of anti-dumping measures, Rudyuk said on May 24 during the EUROMETAL conference in Barcelona.

Following Russia’s invasion of Ukraine, the EU redistributed volumes initially reserved for Belarus and Russia among all other exporting countries, and will soon suspend all safeguards and anti-dumping measures for Ukraine.

Considering the profoundly different market situation now compared to 2018 when the measures were first introduced, Rudyuk said there were three potential options that were likely to happen.

The first was the further softening of measures combined with major changes for some product categories which were mostly affected, for instance, replacing country-specific tariff rate quotas with global quotas for certain categories or increasing the liberalization rates for all products, in order to allow the new trade flow to form under the safeguard framework.

The second option was keeping measures without major changes but for a limited amount of time, and the third was repealing the measures.

“There are expectations in the market that for the first time since their introduction, the conditions are forming somewhat in favor for repealing the safeguard measures instead of their further extension, in one way or another,” Rudyuk said.

The current review of the EU’s system safeguard system is the fourth review and covers 26 product categories, including hot-rolled sheets and strips, cold rolled sheets, metallic coated sheets, tin mill products, stainless hot and cold rolled sheets and strips, merchant bars, light and hollow sections, rebars, wire rod, railway material, and seamless and welded tubes.

Platts assessed domestic HRC prices in Northern Europe at Eur1,060/mt ex-works Ruhr May 23, up 15% since the start of 2022, according to S&P Global Commodity Insights data.

— Annalisa Villa