Posted on 26 Jun 2024
The EU has extended steel safeguard measures for another two years, aiming to stabilise the market amid high import penetration levels, it says in a 25 June note in its official journal.
It has also implemented, effective 1 July, the 15% cap per origin in the “other country” hot rolled coil tariff-rate quota, which it proposed last month (see Kallanish passim).
The European Commission (EC) found the EU’s steel industry is facing significant pressure from high and increasing imports from major steel-exporting countries. This pressure has been worsened by the influx of steel from new origins, exacerbating existing import pressures. The EC also confirmed persistent overcapacity and expects further capacity increases amid slow EU demand growth, Kallanish notes.
As the EU market remains attractive due to its size and prices, and given global overcapacity, numerous trade barriers, and market outlooks, the EC concluded that if safeguards lapse, imports would likely increase. This would further pressure the fragile EU steel industry and cause serious injury. Therefore, safeguard measures are necessary to remain in place to prevent or remedy such injury, it notes.
Imports from non-traditional suppliers, like Algeria, Egypt, Indonesia, Malaysia, and Vietnam, surged during 2022-2023 despite the safeguard measure. This caused significant market disturbances and sometimes undermined the effectiveness of the safeguard, the EC says.
Eurofer has welcomed the decision but emphasised the need for a long-term solution to address global excess capacity, which is four times the size of EU steel demand.
“Europe has become a favourite export market for carbon-intensive excess capacity, while we strive for decarbonisation leadership. This is a structural problem that poses an existential threat to all EU clean tech value chains at a crucial time for our transition. Safeguards will cease in just two years from now. We need to find a new, long-term solution to address this situation,” says Eurofer director general Axel Eggert.
The Commission highlights that since 2021, steel import penetration in the EU has exceeded pre-safeguard levels, adversely impacting the industry. Despite the safeguard, global excess capacity increased by nearly 50 million tonnes from 2019 to 2023, with an additional 158mt expected by 2026. This surge is driven by regions like Southeast Asia, the Middle East, and North Africa, where capacity expansions far outstrip local demand, partly due to Chinese investments.
“As a new EU cycle is about to begin, we call on all European institutions to tackle excess capacity as a matter of urgency in the upcoming months. We stand ready to support them in this endeavour,” Eggert notes.
Source:Kallanish
