The EU’s new safeguard mechanism, designed to tackle the negative effects of global excess capacity on the bloc’s steel market, is expected to support domestic flat steel prices in the second half of the year, according to market sources.
The mechanism is far more restrictive than the safeguard system first introduced in 2018, slashing import volumes by 47% and imposing a 50% duty on any material exceeding quota allowances. Sources say the tougher limits represent a major shift and are already reshaping buyer behavior.
“Imports are dead in my opinion,” one Italy-based service center said. “We will see some big increases in European prices in the coming weeks,” he said, noting that imports could become viable again if the price gap between Europe and Asia widens further.
One Italy-based producer said the new environment had already set a higher price floor. “I see a new target price up by a minimum of Eur50/mt. If buyers are not ready, producers will simply wait. Imports are out of any discussion at the moment.”
Platts, part of S&P Global Energy, last assessed domestic hot-rolled coil in Southern Europe at Eur695/mt ex-works Italy July 15, up Eur145 since the new measures were proposed on Oct. 7, 2025. Imported HRC in the region was assessed at Eur580/mt CIF Southern Europe, up Eur95 across the same period.
Import availability has tightened further for cold‑rolled coil and hot‑dipped galvanized steel, as Europe’s downstream capacity remains constrained by fewer cold‑rolling and galvanizing lines, in contrast to the overcapacity seen in HRC. European Commission data shows that three HDG 4B quotas — China, Turkey and “Other countries” — have already been exhausted, a shift that could force traditional importers to source material domestically.
Availability has also been squeezed by the EU’s antidumping investigation into CRC imports from India, Japan, Taiwan, Turkey and Vietnam, adding another layer of pressure to the downstream market.
“Some of my customers have stopped importing for months,” one Germany-based mill source said. “HRC, we have an overcapacity in Europe, but [galvanized] and cold-rolling lines are limited.”
Prices in the first half of the year rose sharply as a result, with many participants expecting further increases as the year progresses. Platts last assessed domestic CRC in Northern Europe at Eur820/mt ex-works Ruhr on July 15, up Eur160 since Oct. 7. Domestic HDG was assessed at Eur820/mt ex-works Ruhr July 15, up Eur145 over the same period.
“Two or three weeks ago, customers would have been reluctant to purchase, but now they aren’t, as they are anticipating price increases,” one Northern Europe-based mill source said.
Turkish exporters left unhappy with changes; seek new markets
The tighter quota structure is also reshaping trade flows outside the bloc, with some exporting nations like Turkey facing sharply reduced access to the EU market, despite having a free trade agreement with the EU that grants additional duty‑free volumes.
Market participants in the region said the revised system still leaves Turkey at risk of losing market share, as lower quota allocations limit its ability to supply the EU. For example, the quota for Turkish HRC was reduced by almost 60% to just 160,573.74 mt per quarter and was exhausted within one day, with entries surpassing the allowance, signaling the impact the new quotas are having.
“I think the regulation is unfair for Turkey, especially the quota for hot‑rolled coil,” one Turkey‑based reroller source said. “We already see prices are moving down and we need to find other markets to export to.”
Platts, part of S&P Global Energy, last assessed export HRC in Turkey at $590/mt FOB July 10, stable week over week, but down $35 since the start of June.
High stocks, weak demand to weigh on price increases
Imports into the EU rose sharply in 2025 as buyers stocked material ahead of both the safeguard overhaul and the bloc’s Carbon Border Adjustment Mechanism. As a result, inventory levels remained high through the first half of the year, though several sources said these could begin to ease once the summer slowdown passes and restocking patterns normalize.
Since Jan. 1, under the CBAM regulation, many imported iron and steel goods have become subject to a carbon cost, further narrowing the price advantage of overseas supply and reducing the incentive to continue building stocks. Market participants have said the added charges have made imports from many origins less competitive and too risky compared with domestic material.
Despite the regulatory pressure on imports, participants across the supply chain said weak real demand in key end‑use sectors, particularly construction and automotive, is likely to cap domestic price increases in the coming months.
Data from the European Steel Association, or EUROFER, also points to a fragile outlook, with apparent steel consumption still about 10 million metric tons below pre‑pandemic levels and growth expected to slow sharply to just 0.4% in 2026.
In its most recent Economic and Steel Market Outlook published June 25, the association said modest improvements in demand should not be mistaken for a genuine recovery, citing continued weakness in manufacturing and cost pressure on steel‑using sectors.
Participants voice concern over imports of steel derivatives
While the safeguard system targets primary steel products, several participants said it leaves a gap around imports of manufactured, steel-derived goods, which could undermine the effectiveness of the new regulation.
“Products like washers, springs and refrigerators are coming in without any duty,” one Germany-based trader said. “Imports have increased dramatically year on year from Asia. This is a big risk for steel processors in Europe.”
A Benelux-based producer welcomed the quota changes but also highlighted that the system should be expanded to cover steel products further downstream.
It is not the first time participants have called for the extension of regulation. Many called for the scope of CBAM to be expanded to cover downstream goods, prompting lawmakers to consider strengthening the regulation from 2028.
Even with expectations of price increases in the second half of the year, high stocks, weak demand and ongoing regulatory uncertainty mean the path upwards remains far from guaranteed.
