EU states approve steel import safeguard measures

EU member states have supported a European Commission proposal to impose definitive safeguard measures on steel imports.

The commission will finalise the procedure so that definitive measures enter force before provisional safeguard measures, in place since July 2018, expire on 4 February this year. The new measures will be in force until July 2021.

The measures target a "well-defined list of steel products, regardless of their origin and strike a balance between the interest of European steel producers and users", the commission said. The measures would impose a 25pc duty on imports above certain product-specific thresholds, based on average imports in 2015-17.

Major steel users had requested higher tariff-free volumes. European wind energy association WindEurope joined carmarkers in calling for higher tariff-free volumes than those put forward in the commission's proposal.

The European Automobile Manufacturers Association (ACEA) is "extremely disappointed" by today's decision, it said. EU automobile manufacturers source 94pc of their steel in the EU and will suffer from an inflationary effect on European prices, it said.

The ACEA further pointed to consistently high prices and delivery lead times for automotive steel grades. And it noted the limited possibility of trade diversion to the EU, well below any levels that could cause "serious injury" to EU steel producers. Non-passivated hot-dip galvanisation (HDG), which was exempt from the duty on Chinese material, is included in the definitive safeguard, much to the dismay of carmakers.

European steel producers Eurofer generally welcomed the measures. But it opposed country-specific quota owners expanding their quotas by consuming unused residual allocations in the last quarter of the period, typically the second quarter of the year.

And Eurofer wanted changes to avoid excess imports from upcoming steel producers in developing countries, such as Indonesia, which today represent less than 3pc of EU imports.

Eurofer members had expressed disappointment that Turkey did not have its own country-by-country quota for flat products, and could sell into the large residual quota. Turkish shipments to the EU rocketed last year after the US market was closed off by the Section 232 tariff — and, in particular, the doubling of the Turkish duty to 50pc.

Buyers of rebar and wire rod are unhappy with the quotas, which they feel will be too restrictive and affect domestic mill pricing. UK rebar buyers, where there is one domestic mill that owns half the downstream fabrication market, are particularly perturbed.

Immediately after Argus reported the quota levels on 28 December, trading firms selling in the UK bought Turkish material because they were concerned about the quotas filling very quickly.

UK Steel welcomed the safeguard, which it said was "necessary" because of the Section 232 tariffs in the US.

"From a UK perspective, the priority for the government must be to come forward with a contingency plan for what happens in the event of a no-deal Brexit. At present, no deal means no safeguards for UK companies. This cannot be allowed to happen, particularly on top of all the damage the mayhem of a no-deal Brexit would heap upon the sector — we need certainty now", UK Steel director-general Gareth Stace said.