EU, US fail to secure deal on steel, aluminum sustainability; extend deadline to year-end

The US and the European Union have been unable to secure an agreement for a Global Arrangement on Sustainable Steel and Aluminium (GASSA) at a summit in Washington but have extended the deadline for negotiations until the end of the year, according to a joint US-EU statement.

The joint statement comes as European Commission President Ursula von der Leyen and European Council President Charles Michel met with US President Joe Biden to discuss a range of issues including curbing excess steel and aluminum capacity and supporting decarbonization within the metals industry.

“Throughout these two years, we have made substantial progress to identify the sources of non-market excess capacity,” the statement reads. “We have also achieved a better understanding of the tools to address the emissions intensity of the steel and aluminum industries. We look forward to continuing to make progress on these important objectives in the next two months.”

The statement did not list the specific areas of contention that still need to be addressed.

The GASSA initiative is aimed at developing common rules for trade in the steel and aluminum sectors in order to restore market conditions on the international steel markets and to limit the CO2 intensity of steel and aluminum in all types of production. It stems from an Oct. 31, 2021 agreement regarding the Section 232 tariffs first put in place by former President Donald Trump in 2018 under which blanket import tariffs of 25% on steel and 10% on aluminum were applied for most countries.

At the time, the US and EU reached an interim arrangement that replaced the Section 232 tariffs on EU-origin metals with quotas — 3.3 million mt/year for steel and 384,000 mt/year for aluminum – in effect from January 2022. However, this arrangement is set to expire at the end of this year with the EU pushing for the removal of tariff rate quotas, or TRQ as part of a final deal.

The original deadline to wrap up GASSA negotiations was set at Oct. 31.

Steel groups respond

German Steel Association President Bernhard Osburg said in statement the group regrets that “a great opportunity has been missed here and now appeal to the EU Commission to use the time until the end of the year to look for common solutions and agree on effective measures.”

“Time is of the essence: The steel industry in Germany and Europe is in the midst of the transformation to climate neutrality and thus in an extremely vulnerable phase,” he added.

In the face of the current markets downturn, the European metals industry is especially keen to promote exports.

Up to 1 million mt/year of primary aluminum capacity in Europe was taken offline in the last two years. This year sees no relief as demand for primary aluminum outside China — impacted by high inflation, energy prices and supply chain bottlenecks — contracted by 5.5% in first half 2023. Overall, the global market appears in surplus with the H1 supply exceeding the 33.7 million mt demand by 700,000 mt with 600,000 mt of this accumulated outside China.

Platts, part of S&P Global Commodity Insights, assessed domestic prices for hot-rolled coil in Northwest Europe at Eur605/mt EXW Ruhr Oct. 20, unchanged on the day.

Kevin Dempsey, CEO of the US-based American Iron and Steel Institute said the industry “appreciates the US government’s ongoing efforts to negotiate a new international arrangement to address both non-market excess capacity in steel and the carbon intensity of steel imported from around the world,” but is “disappointed that to date the EU has not been prepared to agree to US proposals to establish new trade measures that can effectively address these two key issues, which are critical to the future of both the US and EU steel industries.”

“We recognize that these discussions are challenging and we thank the Biden administration for continuing to press for an agreement that ensures the long-term viability of the American steel industry,” Dempsey said in a statement. “We will continue to advocate for an agreement that provides for meaningful and enforceable measures to restrict steel imports from all countries that contribute to non-market excess capacity and that also provides for tariffs on imports of higher carbon emissions intensity steel products.”

Authors: Euan Sadden, Justine Coyne