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Proposed EU steel import quotas change market dynamics

Steel price rises and a search for new suppliers have already begun following the European Commission’s announcement of proposed changes to its import safeguard measures. 

If implemented, the new cap would limit tariff-free imports from nations without a country-specific hot rolled coil quota to 141,849 tonnes for the two remaining quarters of this year. This volume has been comfortably exceeded by certain countries under the current regime. Consequently, concerns are growing that many importers will soon be forced to pay the EU’s 25% above-quota tariffs on a portion of their imported material. 

MEPS International research partners suggest that the EU importers most exposed to the added costs resulting from the proposed cap have already started to increase prices in anticipation of its implementation from July 1. 

Headaches for steel traders 

MEPS steel market analyst Jonathon Carruthers-Green said: “Trade patterns have changed since the introduction of the safeguard mechanism. In 2023 the three largest suppliers of Non Alloy and Other Alloy Hot Rolled Sheets and Strips into the EU were Vietnam, Japan and Taiwan. However, none of these countries have a country-specific quota due to their lower level of exports in 2015-2017, which was the reference period when the quotas were first set. 

“In the current regime, each of these countries is allowed to use up to 30% of the ‘other countries’ quota for this product category. This comes to around 300,000 tonnes of material each quarter and the data that we have seen shows that they are using it. 

“If the EU reduces the cap to 15% then this could cause headaches for traders for the remainder of the year as they work to adjust their supply chains.” 

Research compiled by the Italian steel industry body Assofermet highlighted the effects of the EU’s proposed cap on imports from Vietnam, Taiwan, Japan and Egypt. It pointed out that the proposed reduction on the cap on imports from the four countries could remove 1.63 million tonnes of steel from the market each year.  

Benefits of reduced quota cap 

Nonetheless, Carruthers-Green suggests that the proposed 15% cap on hot rolled coil exporting nations in the “other countries” category would benefit those with their own country-specific volume quota. He said that the change would increase the likelihood of “residual import volumes” which will be made available to them when the ‘other countries’ quota is opened to them from April to June 2025. 

European steelmakers will also benefit from the European Commission’s proposed changes. After months of subdued steel demand, which has forced down hot rolled coil prices across Europe, any restriction of supply should provide upward price pressure and improve mills’ margins.  

MEPS’s June research period has already recorded evidence of major mills’ attempts to implement short-term price increases. International traders who are able to adjust their supply chains in accordance with the new rules could also find opportunities. 

Further analysis of the effects of the European Commission’s proposed changes to its import safeguard measures will feature in the June edition of MEPS International’s European Steel Review. Drawing on information gathered in interviews with market participants, the monthly review features price data, commentaries and forecasts from Europe’s major steel markets.