“EU steel safeguard measures should be maintained,” says EUROFER
The fate of the steel safeguard measures, due to expire on June 30, 2021, is under the spotlight. Many voices are rising, asking not to renew these measures, which were provisionally introduced in July 2018 and definitively confirmed in early 2019. To name but one, a coalition of EU trade associations representing the interests of downstream steel users has urged the European Commission not to extend the measures any further. “Surging prices for steel products and long delivery times,” says the European Automobile Manufacturers Association, “are caused by an insufficient domestic supply.” Extending the safeguard measures beyond June will “add to the uncertainty and adverse market conditions that steel users are currently facing”.
One voice in favor of maintaining the current measures, which take the form of a Tariff-Rate-Quota-System, above which a 25% duty is levied on imports, comes from the European Steel Association EUROFER, that has recently organized a webinar on the State of the EU steel market.
The position of EUROFER is that the critical conditions that led to the imposition of the steel safeguard actions are still present after 3 years. That's why – says Karl Tachelet, Director of Trade and External Relations of the association – an extension of the safeguard provisions is justified and needed. Those critical conditions are: first, that the Section 232 tariffs in the U.S. are still in force, and they have drastically reduced US imports, causing a trade diversion towards Europe; second, but no less important, the global excess capacity is persisting and worsening, while protectionism in third-country markets is still in place. The total steel overcapacity reached around 650 million tons in 2020, 3 times the total EU production capacity. It is driven by China, but also India, Turkey, Iran, Korea, Vietnam, Brazil, Russia, and Indonesia. At the root of this problem, there's the inefficacy of market mechanisms to address excess capacity and national policy distortions, according to Mr. Tachelet.
The quota system – this is EUROFER's position – aims at providing a safety net against market-disrupting trade deflections. The steel quotas did not play any role in influencing or causing the sudden shocks in demand, supply, and prices seen in the last period. In other words, without the safeguard measures, we would have experienced the same tensions in prices, supply tightness, and long delivery times in Europe as we've seen since the COVID-19 crisis.
On February 26, the EU Commission initiated an investigation to decide whether to extend the current safeguard measures. The decision, which impacts the steel-producing industries and the countless European companies that use steel products, will have to be taken before June 30.
BTW, EUROFER just released the new “Economic and steel market outlook 2021-2022, second quarter”. Have a look!
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Picture by Micheal0424, Pixabay
