Tension grows in Germany over EU safeguard plans

As the European Commission is considering a tightening of safeguard measures against steel imports, Germany’s steelmakers and steel users are clashing over the issue, Kallanish finds.

The association of steelmakers, WV Stahl, warns in a statement that the coronavirus crisis will aggravate the problem of overcapacities from other regions landing on European shores. The association names Russia and China as countries where “… massive stocks have piled up because mills did not adjust their production to the lower demand, but in fact expanded it.” Once the economy revives, the surplus volumes will be looking to enter the European market, WV Stahl believes. It suggests a reduction of quotas to avoid “… speculative increases in imports”, in line with the legal framework of the WTO.

The association’s plea for stricter measures is shared by trade union IG Metall with the call for the measures coming in a jointly-released statement. This alliance is not necessarily natural. By contrast, steel user interest groups take the opposite position, and note that the country’s steel-using sectors represents far more jobs than the steelmakers.

“A further reduction of import quotas for steel is not acceptable,” write the federations of cold-rollers (FV Kaltwalzwerke) and of sheet formers (IBU) in a joint statement. “We do not see and do not expect a sudden increase in imports,” they say, adding that any forecast in itself is purely speculative.

Both groups doubt that the claim of the mills is in line with the WTO rules, and they have backing from analyst Andreas Schneider of Stahlmarkt-Consult. He notes that the safeguard measures “… trod on thin ice from the very beginning”, but were possibly acceptable as a reaction against the US import duties. But now, the mills’ request to reduce duty-free volumes by a straight 75% is nothing but a “… reinterpretation” of the original intention, with the mere aim to protect market shares, Schneider writes.