steel safeguard measures

The European Trade Commission implemented steel safeguard measures to protect its market from flooding when U.S. Department of Commerce implemented Section 232 in 2018. In the last three years, tit-for-tat trade measures among trade partners shaped the pre-pandemic steel sector’s imports and exports volumes.

Although 2020 began with a focus on trade relations in EU, the Covid-19 pandemic impacted the European steel sector with lockdowns, halting blast furnaces and lagging the supply chains. Demand for steel dropped 50% between March – June 2020, and approximately 40% of the EU steel workforce was either laid off or switched to part-time shifts. According to EUROFER, volume of imported hot rolled coils dropped by 27% in the Q1 2020 period.

As the H2 2020 period showed the initial signs of sector-wide normalization for European steel demand, new tensions encompassing steel supply chains and changing price levels emerged. In a letter to ETC Commissioner Valdis Dombrovskis, EUROMETAL urged ETC to protect steel consumers’ interest by revising the European Union steel safeguards based on the principles of open market and fair-trade principles.

Since March – April 2020, several steel mills continued to limit their production, causing fluctuations in steel supplies. On the other hand, state stimulus plans boosted the demand for steel, resulting in an imbalance between supply and demand. Consequently, European steel prices grew exponentially in the last several months; resulting in steel product prices such as hot-rolled coils to hit highest levels in the last 12 years. The current situation may impact both local industry and the steel using industries in Europe which are considered essential for EU manufacturing.

EUROMETAL urged ETC to consider two approaches to revise EU Steel Safeguards, which are currently set to expire on June 30th, 2021. The federation asks ETC to take the pricing from last 18 months period into account, and to consider the remaining stocks available at the ports at the end of each quarterly period. According to EUROMETAL, these two approaches would reinforce European steel market’s capability to gauge whether it is reaching its targets, and local businesses’ ability to compete freely.

Underlining the importance of free-trade, the federation echoed its message for consolidation from last year:” There will be no market for the steel production if there is not a market of consumers”.