European definitive safeguard measures effective Feb 2

The European Commission has imposed definitive safeguard measures on imports of steel into the European Union effective February 2, the Commission said Friday.

Market sources told Platts that the website to monitor the imports would not be operational yet for the upcoming period and have doubts how the system would be running from Saturday, creating headaches for traders. Sources said that particularly for wire rod, quotas could be filled quickly.

The EC did not respond to Platts’ request for comment when asked about the monitoring operations.

The safeguard measures are a direct response to the US government’s introduction of 25% Section 232 tariffs and replace the existing provisional duties that the commission introduced in July last year.

“The restrictions on the US market caused by the Section 232 tariffs on steel are causing a diversion of trade flows into the EU,” the EC stated, adding that an investigation has proved that this has occurred since the US imposed the tariffs last year.

The EC notified the WTO ahead of Christmas of the new safeguard plan, which was ratified by European Union member states in January.

“These measures are fully in line with the EU’s WTO commitments and have been carefully shaped to preserve a continued flow of imports that guarantees effective competition in the European steel market and sufficient choice for the numerous EU users of steel,” the EC said.

The EC measures comprise tariff-rate quotas on a country-specific basis on the biggest steel-supplying nations combined with global quarterly quotas for all other countries for each of 26 products, exempting hot-rolled coil imports which would receive a quarterly global tariff-rate quota.

The safeguard measures are intended to be in place for three years, expiring June 30, 2021. Once a quota has been filled, a 25% duty on imports will apply.

The level of the tariff-rate quota should be increased by 5% in each period the measures are in force, the EC said. The periods are: February 2 to June 30 2019; July 1 2019 to July 30 2020; and July 1 2020 to June 30 2021.

When a country has exhausted its specific tariff-rate quota, it should be allowed to have access to the quarterly global tariff-rate quota for the specific steel product that would apply to all other countries, but only in the last quarter of each period.

European steel association Eurofer welcomed the start of the safeguards, but criticized the quota increase and said that the quota levels were set too high considering the steel demand outlook for Europe.

“This ‘relaxation’ of the measures is completely out of step with the evolution of the steel market, which is expected to be flat in 2019,” said Axel Eggert, Eurofer’s director general. “This disproportionate change will only benefit importers who, in any case, have taken market share of 25% up from a historical 17% in just three years. 

“This upsets the delicate balance otherwise established by the safeguards: the notion that EU steel users should be able to access traditional trade flows without local steel producers being flattened by deflected and cut-price steel products from outside the EU.”

Eurofer urged the Commission to take into account actual market conditions at the time of the first revision of the final safeguard measures, in July 2019.

German steel federation WV Stahl also said that the revision clause should be used to take steel demand into account and adjust quotas accordingly.

— Laura Varriale