Market expects removal of US tariffs on EU

Sentiment in Europe was fuelled today by expectations that US president Joe Biden will remove additional duties levied on European steel and aluminium imports by the end of the year.

The move could have strong implications for the European market, as it could allow European mills to start exporting to the US again, where hot-rolled coil (HRC) prices are coming close to $1,700/short ton (st) ex-works, translating to around $1,545/metric ton, or nearly €1,270/t. In comparison, European HRC is hovering around the €1,120/t ex-works mark, although offers by market leader ArcelorMittal stand higher at around €1,170/t ex-works/delivered.

European supply is already very tight, with spot offers for some flat products now into 2022, so there is concern that this might make European availability even more scarce. Some European producers have been selling tonnes into the US of late despite the tariffs.

The move could impact the decision of the Commission on the potential extension of the safeguard measures in Europe. The quotas — which were imposed in an effort to prevent a diversion of tonnages originally destined for the US market when the Trump administration introduced Section 232 measures in 2018 — are set to expire on 1 July. They have successfully managed to cap import arrivals in the bloc, but coupled with lower production over 2020 in the EU, lower stocks at end-users and a revival in demand in 2021, have seen European flat steel prices surge.

Market chatter has suggested the EC plans to extend the measures for another year, and increase quota volumes by 5pc, but market participants now say the final form of the measures could be changed should the US remove tariffs on European producers. It is unlikely that such a move would result in the complete scrapping of the quota system, as other countries would still be subject to the US tariffs.

By Lora Stoyanova