The European Commission implementing a 15% cap on the “other country” tariff-rate quotas for hot rolled coil and wire rod at short notice is “unfair”, according to Fernando Espada.
The abrupt implementation has caused uncertainty and challenges. “The rules have been changed, knowing that the safeguards scheme was ending at the end of June. I think it’s very unfair for the market that the European Commission appeared with this creativity two weeks ago, which was communicated in a letter to the World Trade Organization,” Espada said at this week’s Kallanish Europe Steel Markets 2024 conference in Milan. The proposal should have been made known to the market in January, he added.
“Nobody knows if they will have to pay €70/tonne [as a result of the cap]. By the way … get your cash ready because those things are paid instantly, and there is a lot of uncertainty from now on,” he continued.
Espada said he does not see any reasons for demand in Europe to recover significantly in the next six months. “We really need the European Central Bank to do a good movement in order for [steel demand] to recover, especially in construction, because construction will be important for the rest of the activity in Europe,” he noted.
The European Central Bank’s modest interest rate cut is insufficient to spur steel demand, particularly in the construction sector, while demand from automotive is being hampered by electric vehicle uncertainty and competition from China. The bank’s recent interest rate cut was only 0.25 percentage points, a smaller cut than some expected.
But the recovery also depends on the particular country situation. Germany is in a very weak position, facing the consequences of having been heavily dependent on Russian gas to drive its industrial competitiveness. “Now, they are paying the bill,” Espada noted. France is also affected, and the situation in Italy is not the best. Only Spain and Portugal are performing better in terms of demand, he concluded.
Elina Virchenko UAE
