EU protectionism to weaken entire value chain
According to Italian flat steel processors, a turn on the screw on the current protectionist measures are likely to bolster European steelmakers’ price increases; however, this trend is unsustainable without a resurgence in downstream consumption, multiple sources tell Kallanish.
All eyes are on the implications of the recent European Steel Association (Eurofer) proposals submitted to the European Commission regarding the enhancement of safeguard and other protectionist measures.
“In addition to other demands, Eurofer is suggesting halving the safeguard quotas. If their requests are accepted, it would represent a significant setback for the European manufacturing sector,” states a representative from the Italian trade association Assofermet. “We are collaborating with the politicians representing us in Europe to ensure that EU officials take into account the potential impact on manufacturing. Steel consumers are likely to scale back their capacities as they will struggle to keep up with the accelerating price increases in Europe. A boomerang effect is likely to affect European producers if the EU complies with all of Eurofer’s requests. They may enjoy high prices in the future, but since this will destroy the manufacturing sector, orders will be reduced. This is what happens when only one area of the industry is protected.”
Assofermet is advocating for the European Commission to archive the existing safeguard measures and refrain from extending them beyond 31 December 2025. This is to avoid any overlap with the Carbon Border Adjustment Mechanism (CBAM), which could result in further cost increases for the EU steel processing sector (see separate article).
A large re-roller expects that Eurofer demands will be granted and is implementing price increases in line with hiking hot rolled coil prices.
A mid-size service centre also notes widespread apprehension that demands will be granted.
“This will lead to a significant decline in imports, resulting in a substantial loss of competitiveness for both service centres and our clients,” he comments.
Amidst the ongoing review of EU steel import safeguard measures, Eurofer has provided recommendations to the European Commission on making the measures more restrictive, according to Yuriy Rudyuk, partner at Van Bael & Bellis. Eurofer is proposing reducing tariff-rate quota volumes to reflect declining EU steel demand, raising the safeguard duty to 32-41%. It is capping quotas for other product categories at 15%, as was done from July for HRC and wire rod, Rudyuk indicates in a LinkedIn post.
The association has suggested removing the carry-over option and replacing residual quotas with country-specific ones. It also advocates halting new exemptions for developing countries in the final year of the measures (see Kallanish passim).
Natalia Capra France
Eurofer proposes reduced safeguard volumes, higher duty
Amid the ongoing review of EU steel import safeguard measures, the European Steel Association (Eurofer) has provided recommendations to the European Commission on making the measures more restrictive, according to Yuriy Rudyuk, partner at Van Bael & Bellis.
Eurofer is proposing reducing tariff-rate quota volumes to reflect declining EU steel demand, raising the safeguard duty to 32-41%, and capping quotas for other product categories at 15%, as was done from July for HRC and wire rod, Rudyuk indicates in a LinkedIn post.
The association has also suggested removing the carry-over option, and replacing residual quotas with country-specific ones. It also advocates halting new exemptions for developing countries in the final year of the measures.
The proposals are expected to face opposition from importers, and industrial users, with the Commission needing to balance Eurofer’s requests against legal constraints under EU and WTO laws, Rudyuk opines.
“We cannot confirm the below as of today we have not yet sent any contribution to the Commission,” Eurofer says in response to a Kallanish request for comment.
The European Commission set the deadline for EU steel users and producers to submit questionnaires as 10 January 2025. The Commission will conclude its review by 31 March 2025, with any decisions potentially applying from 1 April 2025, including a new TRQ volume.
Elina Virchenko UAE
EU re-rollers increase prices on costlier HRC
Multiple Italian re-rollers, along with tube manufacturers in various European nations, are enacting price increases of €50/tonne ($52), industry sources tell Kallanis
The increase is effective immediately and is considered essential for margin recovery, given the unsustainable nature of current prices versus costs. Production costs for re-rollers are on the rise, influenced by escalating prices of hot rolled coil in Europe, coupled with additional import restrictions stemming from the EU’s safeguard measure review initiated this week.
Protectionist measures are affecting major coil processors and tubemakers, who procure substantial coil tonnages each year from third countries to meet their extensive processing requirements.
A significant number of re-rollers in Europe are expected to carry out extended production halts to align supply with demand during the holiday period.
Multiple sources confirm to Kallanish that production will cease for approximately three to four weeks. Given the present low inventory levels, the production halts are likely to result in diminished product availability, with shortages expected for specific grades.
The market is quiet after buyers finalised their purchases for December. January contract values, however, are expected to rise in accordance with the price hikes.
European HRC prices have increased in contracts to an average of €560-570/t base delivered, while derivative prices in Italy have shown stability, with tube discounts flattening on-month at 47-48 points.
ArcelorMittal is increasing coil prices by €20/t in Europe for delivery in the new year. Lead times at the steelmaker’s plants in Europe are now extended to February and March. For the few February allocations left of HRC, new asking prices are at €630/t base delivered. Prices for hot-dipped galvanised coil are also being pushed up, to €750/t base delivered.
The European Commission’s investigation will determine whether the EU safeguard measure on steel imports needs amending to reflect recent market developments, following a request by 13 Member States. The investigation will be concluded by 31 March 2025. Any resulting decision may become applicable as of the start of a new quarter – 1 April 2025 – including with a new TRQ volume.
Natalia Capra France
EU Commission initiates review of EU Safeguard Measures on Steel Imports
European Commission has initiated a functional review of the EU Safeguard measures on steel imports. This decision follows a request from 13 EU Member States, who provided evidence pointing to a contraction in Union demand for steel and widening gaps between the current level of duty-free quota volumes and actual demand.
Additionally, the surge in China’s steel exports to major regions has intensified global trade flows, leading to increased steel exports from other markets into the EU.
The request calls for a reassessment of the allocation and management of the tariff-rate quotas. Notably, the Commission has indicated that the review process will be accelerated, with any adjustments to the current regime becoming applicable as of 1 April 2025.
Questionnaire for EU Steel Users: