As the market awaits the UK’s formal approval of steel import safeguards by the end of June, UK Prime Minster Boris Johnson indicated in his speech at the G7 Summit in Germany that steel tariffs will likely be extended to protect the British steel industry.
Johnson told the summit June 26 that the UK steel industry was “going through a difficult time, partly because of energy prices,” and until British steel could be provided with cheaper energy and electricity for its blast furnaces, it was “reasonable for UK steel to have the same protections that absolutely every other European steel economy does.”
The UK Secretary of State for International Trade Anne-Marie Trevelyan recommended June 23 that the UK extends tariffs and quotas on 15 categories of steel products to sustain domestic steel production for a further two years.
The proposal is expected to be given formal approval in parliamentary business June 30.
The UK safeguards system, which is due to expire on June 30, has been under review since late 2021. It mirrors the EU safeguards system, put in place in mid-2018 in response to the US’s imposition of Section 232 import tariffs of 25% on steel imports in March 2018.
UK industry is partly dependent on imported steel, as it produces only around 70% of its annual requirement of around 10.2 million mt crude steel, according to trade body UK Steel.
A tightness in some products, and soaring energy costs, led to abrupt price increases in many steel products since Russia’s Feb. 24 invasion of Ukraine.
Platts assessed the weekly UK hot-rolled coil price at GBP1,220/mt ($1,495/mt) DDP West Midlands June 24, up from GBP830/mt at the start of 2022, according to S&P Global Commodity Insights data.
Trevelyan proposes that, based on the basis of a Report of Findings from the Trade Remedies Authority, or TRA, the measure should be extended for a further two years to June 30, 2024 for category 6 (tin mill products), category 7 (non-alloy and other alloy quarto plates), category 12 (merchant bars and light sections), category 16 (non-alloy and other alloy wire rod) and category 17 (angles, shapes and sections of iron or non-alloy steel).
The conclusion was reached as there was clear evidence that if it was discontinued, “there would be serious injury or the threat of serious injury to UK producers,” the government said.
The trade secretary also concluded that the retention of the measure was in the economic interest of the UK.
The TRA identified severe supply problems for category 12, potentially involving associated increased costs to businesses using those products, which resulted in Trevelyan proposing a tariff-free quota increase for the category 12a by 126,136 mt to better reflect trade flows.
The steel safeguard measure will also continue to apply to 10 other steel categories for another two years on the basis of grounds raised by interested parties.
Trevelyan’s decision was previously welcomed by UK steel producers.
However, there are concerns that the safeguards could potentially go against World Trade Organization principles, with Lord Christopher Geidt citing the steel import tightening as one of the reasons for his recent resignation as Johnson’s ethics adviser.
At the G7 Summit, Johnson said there were “tough choices” to make on what action to take and the difficulty came in over whether it was possible to help the UK steel industry, while also staying within WTO obligations.
— Jacqueline Holman, Annalisa Villa