The European Union (EU) has published and implemented its revision of the EU steel safeguard. According to the European Steel Association (EUROFER) the new design of the tariff-free quota will better stabilise trade flows by containing import concentration from certain exporting countries.
While the changes have resulted in improvements, the result is still not sufficient for a large part of the sector, especially given that it is facing depressed domestic steel demand.
Speaking after the publication of the revised measures on 27 September, EUROFER's director general, Axel Eggert, commented, “The largest part of the steel sector is still being squeezed, hampered by unsustainable import pressure – pressure that will not abate, despite the changes made today”.
Steel producers’ margins have all but disappeared, production plans have been curtailed, and installations across Europe have been temporarily closed, affecting thousands of jobs in the industry and the value chain.
“The steel sector is now back in choppy waters – demand is falling and imports are still at a very high level”, Eggert added. “The safeguard nevertheless keeps the door open for these historically high import volumes, even as market conditions deteriorate. We hope that the Commission will, in due course, further review the artificially high tariff free quota level and reduce it close to the 2015-17 import volume.”
The European steel industry has suffered a series of setbacks over the past few years. The EU market has still not completely bounced back from the 2008 economic crisis – and what growth has come has, to a large extent, been absorbed by imports. Global steel overcapacity, targeted dumping from several regions, and rising climate compliance costs have also squeezed margins across the sector.
“We had 18 ‘good’ months between the acute effects of Chinese dumping being stamped out towards the end of 2016 and the imposition of the US’ Section 232 tariffs in mid-2018”, Eggert said. “Imports have remained high and are increasingly concentrated from a handful of trade partners, including Turkey, Russia and China. This concentration has not been diminished by the safeguard measures. Steel prices have collapsed, even as costs continue to rise”.
While noting the fresh revision will have to be seen in action before conclusions can be drawn, EUROFER urges the EU to continue to defend the sector against unfair trade from third countries.
“Steel is at the heart of the EU economy – but it is under threat again because the means to defend it are incomplete”, emphasised Eggert. “We need to see dynamic revisions to this safeguard, and we welcome the suggestion by President-elect von der Leyen for a Carbon Border Adjustment to help industrial sectors, such as ours, re-establish a level playing field with foreign competitors that do not face the same climate cost constraints”.
EUROFER urges continued international efforts against global overcapacity, which is at the root of the challenges faced by the EU sector today.
“Global overcapacity is still running far ahead of growth in worldwide production. We need to see further work done on this abroad – and continued efforts at home to ward off the effects on the EU steel market”, Eggert concluded. “The G20’s Global Forum on Excess Steel Capacity must continue its work so that countries such as China, Indonesia, Iran, Russia, or Turkey stop building up excess capacity that endangers the global steel market. The safeguard alone will not be sufficient”.