UK politicians lambast steel safeguard recommendation

UK politicians broadly rounded on the Trade Remedies Authority's (TRA) preliminary decision to scrap safeguards on nine out of 19 products in a Westminster Hall debate today.

TRA, formerly known as the Trade Remedies Investigations Directorate, recommended on 19 May that the safeguards be removed for nine product groups — including metallic coated sheet, also known as 4b hot-dip galvanised coil, tin mill products, non-alloy bars, sections and wire rod — when the existing measure lapses at the end of June.

Should international trade secretary Liz Truss reject the TRA's recommendations, the safeguard will lapse on all products; Truss cannot modify or partially accept TRA's proposals.

"Government must reject the recommendation of the Trade Remedies Investigation Directorate regarding steel safeguards. And it must ensure all 19 of the safeguards remain in place. These trade defence measures were put in place in order to guard against import surges caused by President Trump's section 232 tariffs and it is absolutely essential they are retained until such as the 232 tariffs are dropped," Stephen Kinnock, Labour MP for Aberavon, said during the debate.

"The TRID's recommendations are tantamount to dismantling the flood defences just as the tidal wave is about to hit," he added.

Holly Mumby-Croft, Conservative MP for Scunthorpe and co-chair of the All-Party Parliamentary Group on Steel, said "an increase in imports in an unprotected category could affect the viability of another steel product and there is a real risk that the UK will be increasingly vulnerable to imports if steel safeguards are removed".

Sarah Champion, Labour MP for Rotherham, said removing the safeguards on nine products "runs the risk of cutting the industry off at the knees", while Christina Rees, Labour MP for Neath, said it could be "catastrophic".

Domestic producers surveyed by Argus flagged particular risk of import penetration on merchant bar, wire rod and tin mill products, should TRA's proposals be accepted.

When politicians refer to the "steel industry", they often talk about upstream producers. But the downstream industry, which indirectly employs many more workers than upstream assets, needs access to sufficient volumes of competitively priced steel.

The International Steel Trade Association, which represents traders and importers, said the proposed measures "do not go far enough to allow the flexibility of supply required in current market conditions, which have been in place for the past six months and are set to continue".

On rebar and hollow sections, it says "specific country restrictions based on historic data have insufficient relevance to the UK/global market" today. Independent rebar fabricators second this view, suggesting there is a risk that they will not be able to source enough sustainable steel to satisfy future demand, given the strong bank of projects in the pipeline — the High Speed 2 rail project alone will require 1.3mn t of steel, of which much will be rails, but also rebar.

ISTA also called for the safeguard to include a shipping clause, as in the original European measures, to allow "existing contractual commitments and cargoes en route" to not impact the quotas being announced at such short notice.

The European Commission has not yet announced its findings on whether the safeguard will be extended. Market participants suggests the commission has decided to extend the measures for a year with a 5pc increase in quota volumes, but it is still fine-tuning to try and find a suitable compromise for the buy and sell-sides of the market.

By Colin Richardson