European HRC prices largely stable, buyers expect more clarity on future market trends
At the same time, mills were heard to still be bullish, pushing for slightly higher prices for HRC with delivery in the second quarter of the year, Fastmarkets understands.
Last week, the European Commission notified the World Trade Organization (WTO) of adjustments to the region’s steel safeguard measures, affecting annual liberalization, introducing caps and changing residual tariff rate quota (TRQ) access for a number of steel products, including HRC, Fastmarkets reported.
The proposed amendments are expected to enter into force on April 1.
In addition, the European Commission announced provisional anti-dumping (AD) duties for HRC imports originating from Egypt, Vietnam and Japan, with the new measures set to be imposed as of April 7.
Both moves were expected to influence the market of imported HRC to Europe, and in turn the domestic prices. But sentiment among industry sources remained mixed, with some participants hoping for additional information on the announced measures.
A trader source told Fastmarkets that import access was clearer now, but the steel sector should wait for additional clarification from the European Commission to fully understand the retroactive applicability of the proposed anti-dumping duties.
The source added that there would not be an immediate effect on the domestic HRC prices.
“Real demand is still weak and the European mills’ price policies, meant to reflect the new safeguard measures, would probably take some time,” the trader added.
A second trader source told Fastmarkets there was no ground for further price increases.
“The [announced] safeguard measures for HRC are not as harsh as expected, and real demand is still low,” the second trader said.
But the source added that mills might still try to increase June delivery HRC prices, speculating on limited supply, because of ArcelorMittal’s plans to idle its Dunkirk blast furnace for three months and the force majeure circumstances with Salzgitter.
A distributor source from the Benelux region confirmed that mills would try to rise HRC prices for June delivery by about €10-20 ($10.90-21.81) per tonne.
A leading European producer was rumored to offer such material at €670-680 per tonne delivered, which would net back to €660-670 per tonne ex-works.
But most offers of May-June delivery HRC were heard at €640-660 per tonne ex-works in Germany and the Benelux area, Fastmarkets understands.
Buyers’ estimations for the tradeable market level in Northern Europe were at €630-640 per tonne ex-works.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €636.67 per tonne on Monday, up by €0.67 per tonne from €636.00 per tonne on March 14.
The Northern European index was up by €4.79 per tonne week on week and by €31.67 per tonne month on month.
In Southern Europe, meanwhile, Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Italy was calculated at €620 per tonne on Monday, unchanged from March 14
The index was stable week on week but up by €25.00 per tonne month on month.
Offers of domestic HRC with delivery in the second quarter of the year were heard at €640 per tonne delivered, which would net back to €630 per tonne ex-works, Fastmarkets understands.
But buyers’ estimations for the tradeable market level were at €610-620 per tonne ex-works.
A third trader source based in Italy told Fastmarkets that domestic HRC prices were largely flat in the past two or three weeks. But according to the source, local suppliers would start pushing for higher prices soon.
The market for imported HRC to Europe remained largely quiet on Monday.
South Korea, Taiwan, and India refrained from making fresh offers to the European market, sources told Fastmarkets.
Indonesia was heard offering HRC to Italy at €540 per tonne CFR, and slightly higher to Northern Europe at €550-560 per tonne CFR.
Saudi Arabia was also heard offering HRC to Northern Europe at €600-605 per tonne CFR.
Julia Bolotova in Brussels contributed to this report.
EU’s proposed new steel import safeguards not tough enough, mills say
The decision to adjust the measures followed a review that began in December 2024. The proposed adjustments to the measures will come into effect on April 1, 2025.
The changes have not been published on the official WTO website yet, but the text has already been distributed among European steel market participants.
The existing measures have been in place since 2018, intended to protect EU steelmakers from a potential surge in imports. The current measures were set to run until June 30, 2026.
The new safeguard adjustments indicate that the annual liberalization rate (the annual increase in the TRQ) will change from 1% to just a 0.1% increase.
“Data shows that the liberalization rate in the past has largely outpaced the evolution of consumption. While TRQs have been increased by almost 25% since the measure was imposed [in 2018], consumption has decreased by 14% over the same period,” a European Commission note to the WTO read.
“These opposing trends have therefore significantly widened the gap between the level of TRQs and the market demand, and created an opportunity for imports to significantly increase their market share,” it added. “The latest market outlooks on world steel consumption only foresee a modest recovery in 2025 [to levels last seen in 2023], which the Union market is expected to follow.”
The Commission also suggested the introduction of a refined regime for access to the residual quota for countries benefiting from country-specific quotas.
Larger exporters that have exhausted their country-specific quota could access the residual quota volumes in the final quarter of the year. The objective of this mechanism would be to avoid volumes in the residual quota being unused.
Under the current functioning review, the Commission was set to cancel such access for several categories, including hot-rolled coil (category 1), cold-rolled coil (category 2), hot-dipped galvanized coil (category 4A), heavy plate (category 7), rebar (category 13) and wire rod (category 16).
The Commission also introduced a new 1B quota for HRC for imports falling under HS code 7212 60 00, “following crowding-out of a highly specific product in category 1 (HRC) as a consequence of introducing the 15% cap in the second functioning review,” the notice read.
Key adjustments proposed
New caps per country
New caps per country over the TRQ volume initially available in each quarter will be introduced not only for HRC and wire rod (categories 1A and 16), as suggested in the review in summer 2024, but also for HDG (categories 4A and 4B), heavy plate (category 7), rebar (category 14) and others (see table).
Notably, for HRC, the cap has been reduced from 15%, initially proposed in July 2024, to 13%.
The total allowance for the “other countries” safeguards category for HRC (category 1A) was suggested at 856,769 tonnes for April-June 2025. This means that any supplier in this category will be able to supply no more than 111,379 tonnes (13% of the total allocation) to the EU during the specified period.
The adjustment would further affect HRC imports falling under the “other countries” category. Vietnam, Japan, Taiwan and Egypt are the major HRC suppliers to the EU under that heading, with Asian suppliers offering the most competitive prices, according to market participants in Europe.
In contrast, in April-June 2024, Vietnam alone supplied to the bloc 231,491 tonnes of HRC.
HRC buyer sources,lambasted the suggested caps, pointing out that they would make importing steel “more like gambling.”
“A cap introduced for nearly all products – plate, CRC, rebar, you name it. Looks like they want to stop us from importing steel altogether,” a trading source said.
Reversing redistribution of sanctioned steel volumes from Russia and Belarus will result in lower HRC quotas
Following the start of Russia’s war of aggression against Ukraine in February 2022, the EU banned the import of all finished steel products originating in Russia and its supporter, Belarus
Those volumes have been redistributed in each product category where Russia and Belarus had country-specific quotas, thus increasing the allocation volumes available to other countries.
But given the current context of the general deceleration in the EU steel market and its deteriorating outlook, “the Commission considers it no longer in the Union’s interest to have these volumes available,” the document said.
The sanctioned tonnages will therefore be removed from the HRC, wire rod, heavy plate and hollow sections quotas.
Specifically, for category 1A (HRC), the Commission suggested a reversal of the redistribution, by as much as 65% of the volumes.
This would result in lower quarterly allocations, as the table below shows.
Against all expectations, no significant quota cuts have been introduced.
“It’s disappointing. No big quotas cut, even though it was expected, and [regional steel association] Eurofer demanded a 50% reduction of quotas. Again, the Commission is too much in the hands of [steel] importers,” a mill source in Europe said.
“HRC quotas are cut by no more than 11% in total, against expectations of 15-50%. It’s a joke. No more than 1 million tonnes of [HRC] imports will be gone [from the EU market] as a result [of new safeguards],” a mill source said.
WTO, steel industry urge interoperable carbon pricing
Panellists at the recent WTO Public Forum focusing on steel sought to explain how interoperable carbon pricing mechanisms could support decarbonisation, Kallanish not
WTO deputy director-general Jean-Marie Paugam said interoperability is crucial in carbon measurement and trade mechanisms, emphasising the shared responsibility between the private sector and government.
Ola Hansen from Stegra, formerly H2 Green Steel, asked panellists how market mechanisms and policy instruments could be developed to support decarbonised steel in new markets, noting “deep green steel comes at a higher cost, making carbon pricing essential”.
Panellist Edwin Basson, director general at worldsteel, emphasised that putting a price on emissions, such as through CBAM, is essential for creating a global market, as many regions are considering similar mechanisms.
“CBAM plays now much more than just a European role. It is setting an expectation in other regions of the world as well. A common arbitrage mechanism for CO2 emissions could compel society to bear the costs of carbon emissions,” he noted.
“The key question is whether global systems can be developed that, while different, are interoperable – meaning they allow the comparison and trading of emission costs across various markets. This would be crucial in moving away from the need to subsidise CO2 reduction efforts globally, as a standardised system would drive the reduction of emissions by making their costs explicit and comparable worldwide,” he added.
Lower costs for green steel could come via trade facilitation and reducing regulatory burdens, according to Adina Renee Adler, executive director at the Global Steel Climate Council. “There’s likely a communications issue; as a trade policy community, we don’t always effectively convey what we’re doing,” she said.
Improving communication on the benefits of trade could generate widespread support, which would help lower product costs, even when initial production costs are high.
Meanwhile, Annie Heaton, chief executive at ResponsibleSteel, warned against using carbon policies for other purposes, like addressing overcapacity, instead of focusing solely on decarbonisation.
“We need to ensure that carbon policies are designed not to deal with that [overcapacity] but to deal with the climate change issue,” she opined.
Anne van Ysendyck, vice president and head of government affairs and environment at ArcelorMittal, highlighted the long-term challenge of higher costs associated with low-carbon steel.
She emphasised the need for uniform carbon pricing, such as through CBAM, but also stressed that incentivising both the production and consumption of low-carbon steel is crucial. Building up scale and addressing energy costs will take time and societies may need to bear higher costs in the short term to drive progress, according to Van Ysendyck.
She also underscored the importance of ensuring that measures are implemented globally and that both production and consumption incentives are effectively supported.
Marc Delobelle, head of fossil-free materials purchasing at Volvo Group, meanwhile, acknowledged there is a premium for green steel but stressed the importance of scaling production to reduce costs in the long term.
Elina Virchenko UAE
European Commission discloses draft duties on China-made battery electric vehicle imports
The European Commission (EC) unveiled on Tuesday its draft decision on definitive countervailing duties on battery electric vehicle (BEV) imports from China, Kallanish reports.
Carmakers received the proposed additional tariffs they will be subject to, and now have 10 days to provide comments. Interested parties can also request hearings with the EC “as soon as possible.”
The decision follows an anti-subsidy investigation officially started on 4 October 2023. Temporary duties, on top of the existing 10% import tariff, entered into force on 5 July 2024. If approved in an upcoming vote by member states, definitive countervailing duties will be imposed on 5 November for a five-year period.
Based on “substantiated comments” received from carmakers on the provisional measures, the EC has slightly adjusted the proposed rates downwards. They range from 17% to 36.3%, instead of the original maximum rate of 38.1%.
However, US EV maker Tesla has received a much lower rate than peers. This “individual duty rate” of 9% was granted as an exporter from China. This means Tesla’s BEV models shipped from its Shanghai gigafactory will only be subject to a total of 19% import duties “at this stage.”
In comparison, BYD vehicles are subject to 27%. Other cooperating companies, which the EC has not publicly disclosed, will face total tariffs of 31.3%. “Non-cooperating” companies such as SAIC, the parent company of MG Motors, are facing the harshest combined rate of 46.3%.
China Chamber of Commerce to the EU (CCCEU) expressed its “strong dissatisfaction and firm opposition to the EC’s protectionist approach.” The group argues the development of the European EV industry, along with the EC’s own report, “shows that there is no sufficient evidence to demonstrate that China’s BEVs cause substantial material injury in the EU market.”
“The EC’s unfair use of trade tools to hinder free trade in electric vehicles, along with this protectionist approach, will ultimately weaken the resilience of the European electric vehicle industry, disrupt the level playing field, and undermine the EU’s own green transition,” it adds.
The move will also exacerbate trade tensions between China and the EU, but the EC doesn’t see it impacting the ongoing procedures in the World Trade Organisation (WTO). Beijing says the EU has not followed WTO trade rules and has initiated a dispute consultation.
EC implements 15pc cap on HRC other countries quota
The European Commission is implementing a 15pc cap on any individual country selling hot-rolled coil into the quarterly other countries quota of its steel safeguard.
This effectively caps any country selling into the other countries at 141,849t/quarter for the rest of this year: the other countries quota for July-September and October-December will be 945,664t.
If no grace period is granted, sources suggest this could lead to significant duties being incurred on 1 July, as many countries will have more than 15pc of the other countries volume in transit to the EU.
The commission decided against any other individual country quotas on HRC, the notification said.
The commission has been carrying out its review of the steel safeguard for months now. Market sources had anticipated Vietnam would get its own quota, while in recent months there have been suggestions Japan actively asked for its own quota.
The liberalisation rate has also been reduced from 4pc to 1pc.
The commission also notified the WTO the safeguard would be extended for two years, meaning there will be a brief six-month overlap between the safeguard and the imposition of the financial component of the carbon border adjustment mechanism (CBAM).
“The commission also established the surge of imports from certain new origins was related to growing overcapacity in certain regions as well as to the significant pressure exerted by a strong increase in Chinese exports to certain markets,” it said in the notification. China has been exporting record volumes of HRC this year, with significant tonnage going into nearby markets, such as Vietnam.
The changes to the safeguard are subject to approval by member states, and the commission will hold consultations from 29 May until June 10 on the proposal.
EU Safeguard Measure is to be reviewed for a possible extension
The European Commission officially announced today that the EU Safeguard Measure is to be reviewed for a possible extension. This is backed by 14 member states who had already requested a review from the EC in January 2024.
The European Commission officially announced today, Friday, February 9, 2024, that the EU Safeguard Measure on certain steel products, which was due to expire in mid-2024, is to be reviewed for a possible extension at the insistence of 14 EU member states.
In addition, the measure is most likely to be extended to the longest possible and WTO-compliant period of 8 years.
US Section 232 tariffs have come to stay
Since the US Section 232 tariffs of the Trump Administration from 2018 are still in force and it is not to be expected that they could be repealed in the foreseeable future, the EC has now also recognized: “…that there are no elements suggesting that the US will be removing the Section 232 measures on steel”.
The introduction of the US punitive tariffs triggered a backlash from the European Union and led to the existing EU Safeguard Measures against steel imports to Europe in 2019.
German steel regions had called for EU Safeguard extension
Last Wednesday, we reported on the German steel regions’ call for the German government in Berlin to support a continuation of the Safeguard measure and that it is therefore only a matter of time before the EC takes action.
Source: steelnews.biz
Carbon border adjustment debate divides EC, steelmakers
European Union steelmakers may be at loggerheads with the European Commission on how a Carbon Border Adjustment Mechanism can be introduced in Europe, according to views expressed during a European Steelmakers’ Association March 17 webinar that focused on EU climate policy.
Introduction of a CBAM on top of the EU’s current Emissions Trading System would be an “overcompensation” in terms of ensuring a fair market for clean steel and risks not being compatible with World Trade Organization policies, Mette Koefoed Quinn, the European Commission’s head of unit, ETS Implementation and IT, DG Climate Action, told industry representatives on the Eurofer webinar. The ETS currently offers some free allocations to steelmakers to avoid carbon leakage.
Eurofer’s members are meanwhile pressing for the ETS to continue for a transition period of eight years after the CBAM is introduced, during which time free ETS allocations would continue to be made to EU steelmakers, the association’s director general Alex Eggert said.
This transition period should run until a sustainable market for “green” steel is fully formed in 2030, according to the association.
“We’ve had intense discussions with trade lawyers who all confirm that carbon border measures are absolutely compatible with WTO….. and even a combination of the two (CBAM and the ETS) to cover the delta between free allocations and carbon costs at the border is compatible,” Eggert said. Europe’s steel industry has already suffered a competitive disadvantage – estimated to have cost the sector some Eur3 billion in 2018 at current prices – due to the ETS system, where the shortage of free ETS allocation to the sector is currently put at around 20%, he said.
The EU is extremely exposed to international competition, with a high cost susceptibility because the EU imports around 30 million mt of steel a year and exports some 20 million mt/year, according to Eurofer data.
CBAM may be implemented in 2023
The European Parliament March 10 approved the principle of setting up a CBAM and the EC is expected to move ahead with a legislative proposal for its introduction in June, for possible implementation in 2023. Andrei Marcu, founder and executive director, European Roundtable and Climate Change and Sustainable Transition, said that so far the only place that a CBAM has been applied is in California. However, US President Biden is understood to be considering one at national level.
WTO Deputy Director-General Alan Wolff said last month that cooperation between nations will be essential to avoid disputes around carbon border taxes. On March 5 the WTO launched a Trade and Environmental Sustainability joint initiative group with 53 member countries, which is expected to be a forum for the discussion of carbon border taxes.
Under the European Green Deal, the EU steel industry needs to reduce its carbon emissions by 55% from 1990 levels by 2030, and achieve net-zero carbon production by 2050. According to Eurofer’s climate and energy director, Adolfo Aiello, this may involve investments of Eur144 billion including in breakthrough technologies which could increase steel production costs and prices by between 35% and 100% above current levels, as a well as supplies of up to 400 TWh of climate-neutral electricity, seven times more than what the sector purchases from the grid today .
The investments required are expected to come from steel sector companies themselves, public sector bodies such as the EU Innovation Fund, and ETS revenues, around 80% of which are currently being used for “green” actions, according to the EC.
“We support climate ambition but it needs to be achieved in the most cost-efficient way: higher climate ambition means and needs better carbon leakage protection, and more support for low carbon technologies,” Aiello said. Carbon is currently priced in the EU at around Eur40/mt, having risen dramatically over the past three years after hovering around Eur7/mt for several years. This decade carbon prices might even rise to “three-digit” levels, he said.
“Fair burden-sharing is needed between ETS and non-ETS sectors,” he said, adding the commission needs to redirect more of the ETS revenues to industry.
EC considering six options
The EC is looking at six different options to decarbonize, but does not consider that a CBAM could be complementary to the ETS system, Quinn said. It would be an alternative, she said.
Phase 3 of the EC’s ETS allocation system has just finished, without carbon leakage having been seen, she said. In Phase 4 of the ETS, designed to cover the January 2021 to 2030 period, free allocations to companies are now being calculated.
The overall structure of the ETS is being reviewed: there will be sufficient free allocation, to the benefit of steelmakers, Quinn said. “The current system foresees the sufficient allocation of free allowances until 2029-30: giving adequate carbon leakage protection. However, we’re now looking at whether to introduce CBAM… the commission says it’s either CBAM or free allocation, you can’t have both because that’s a risk of double compensation…. but a transition period might be needed and that’s one of the alternatives we’re looking at,” she told the webinar.
While ETS free allocations are currently giving adequate carbon leakage protection, they are reducing the incentive to go for quick decarbonization: “The pricing is not coming through as it should into the products and this is a problem,” Quinn said. CBAM could provide a useful incentive to the steel industry to decarbonize within Europe and externally, she said.
— Diana Kinch
WTO issues call for papers for 2016 WTO Essay Award for Young Economists
The WTO launched on 8 February an invitation to young economists to submit papers for the 2016 WTO Essay Award. The Award aims to promote high-quality research on trade policy and international trade co-operation among young economists and to reinforce the relationship between the WTO and the academic community.
Prize
The annual WTO Essay Award consists of a prize of CHF 5,000 to the author(s) of the winning essay. In the case of a co-authored paper, the prize will be equally divided among the authors. The winning paper will be officially announced at the annual meeting of the European Trade Study Group (ETSG), which is the largest conference specializing in international trade. The award ceremony will take place in September 2016 in Helsinki, Finland. The winning author(s) will receive funding to attend the meeting.
Selection
An Academic Selection Panel is responsible for the selection of the winning paper. The Panel comprises:
- Professor Avinash Dixit (Princeton University)
- Professor Robert Steiger (Dartmouth College)
- Professor Alberto Trejos (INCAE Business School).
Dr Robert Koopman (Director, Economic Research and Statistics Division, WTO Secretariat) is ex officio member of the Panel. Dr Roberta Piermartini (Counsellor, Economic Research and Statistics Division, WTO) coordinates the work of the Selection Panel.
Eligibility
The paper must address issues related to trade policy and international trade co-operation. The author(s) of the paper must possess or be engaged in the completion of a PhD degree and, if over 30 years of age, be no more than two years past a PhD defence. In the case of co-authored papers, this requirement shall apply to all authors. In addition, to be considered for the Award, essays cannot exceed 15,000 words.
Past winners
- 2015: Christoph Boehm (University of Michigan), Aaron Flaaen (Federal Reserve Board of Governors in Washington D.C.) and Nitya Pandalai-Nayar (University of Michigan)
- 2014: Jonathan Dingel (Columbia University) and Claudia Steinwender (LSE)
- 2013: Felix Tintelnot (Princeton University).
- 2012: Treb Allen (Yale University)
- 2011: Rafael Dix-Carneiro (University of Maryland) and Kyle Handley (Stanford University)
- 2010: Dave Donaldson (MIT) and Olena Ivus (Queen’s University)
- 2009: Ralph Ossa (University of Chicago). The runner-up was Mostafa Beshkar (University of New Hampshire).
Important deadlines
Essays must be submitted by 1 June 2016. The Economic Research and Statistics Division of the WTO Secretariat will shortlist eligible papers by 15 June 2016 and the Selection Panel will take a final decision by 15 July 2016. Only the author(s) of short-listed essays will be notified.
Publication
The winning essay will be published in the WTO Working Paper Series and it is the responsibility of the author(s) to endeavour to secure publication of the contribution in a journal.
Submissions
All submissions should be sent to essay.award@wto.org. Submissions should include as separate attachments in PDF format:
1. the essay
2. the CV of the author(s), specifying (i) current affiliation(s), (ii) the academic institution awarding the PhD, (iii) the year (or the expected year) of the PhD, (iv) the date of birth of the author(s).
