EU set to revamp steel-import controls as economy recovers

Bloomberg

The European Union (EU) plans to revamp its steel-import restrictions to guard against major market distortions as the bloc’s economy recovers from the effects of the pandemic.
The proposed changes apply to EU import curbs introduced two years ago to prevent a controversial 25% US levy on foreign steel from diverting global shipments to the European market and flooding it.
The European “safeguard” measures involve a 25% tariff on EU imports of 26 types of steel ranging from stainless hot-rolled and cold-rolled sheets to rebars and railway material when the shipments exceed a three-year average. The planned overhaul stops short of quota cuts demanded by European producers.
“It is fundamental that the gradual resumption of activity and return to normality take place in an orderly manner, in such a way that all participants in the EU steel market find their traditional place,” the Brussels-based European Commission, the bloc’s executive arm, said in a notice published on Friday evening. The changes are due to take effect on July 1.
The coronavirus sent the European economy into a tailspin shortly after the commission in February began a routine review of the EU steel-import limits. Slumps in the region’s consumption and production of the metal sparked concerns about stockpiling in exporting countries such as China and a possible surge in shipments to Europe as national lockdowns are eased.
“The proposed adjustments should deter any undue stockpiling behaviour in the very early phases of the recovery that could empty the market in an opportunistic manner,” the commission said. “These opportunistic practices not only seriously endanger the obligation to preserve traditional trade flows in terms of origins, but also risk unduly displacing domestic production.”
Europe’s steel producers are demanding a massive quota reduction in a second review that the commission, the 27-nation EU’s executive arm in Brussels, began in mid-February. That was just before the pandemic triggered widespread lockdowns across EU and sent the bloc’s economy into a tailspin.
Eurofer, the main European steel-industry group representing manufacturers including ArcelorMittal, Thyssenkrupp and Salzgitter, sent a letter to the commission last month urging a 75% quota cut for the second and third quarters of this year to address slumps in European consumption and production of the metal.
“The economy has changed fundamentally,” Eurofer said in a letter seen by Bloomberg News. “This radically different situation means that urgent action is needed.”
At issue is whether the gradual reopening of the European economy over coming weeks prompts a surge in EU steel imports, which generally account for about 20% of the bloc’s market.
While the commission declined to comment on its review, EU trade chief Phil Hogan has signaled it will take into account the prospect of a jump in steel shipments to Europe from the likes of China.
Concerns exist in Europe “about the possible stockpiling of steel, particularly by China, and what will happen to this particular stockpiling of product when the lockdown is lifted,” Hogan told an April 21 video conference with the European Parliament’s trade committee.
“We are looking at our review of our steel safeguards in this context,” he said. “We’ve had a number of meetings even this month with representatives of the industry, so we are very familiar with their concerns and their problems.”