Extension of duty-free regime for Ukrainian steel products is extremely important – Interpipe

The extension of the ‘trade visa-free regime’ with the EU for Ukrainian steel products for another three years is extremely important for the domestic steel industry in the medium term. This opinion was expressed by Denys Morozov, First Deputy CEO of Interpipe, in a blitz interview with Interfax-Ukraine.

He noted that this is only the first step, as the legislative resolution will come into force after it is approved by the EU Council and officially published.

Denys Morozov reminded that in 2022, thanks to the efforts of the Ukrainian leadership, the EU and the US suspended all duties and quotas on domestic steel products. The decision was temporary, for a year, but it was extended annually and allowed to increase the supply of Ukrainian steel products to these markets, to some extent compensating for the loss of other foreign markets.

“During the hostilities, this was a very significant support from the government for most Ukrainian steel and pipe companies located in the regions that are constantly under fire. They are currently operating, have retained their workforces, pay taxes and support their employees in the Armed Forces and local communities,” he explained.

Last year, for example, Interpipe’s companies paid UAH 5.5 billion in taxes to the central and local budgets. The contribution of Interpipe Niko Tube, which is located in frontline Nikopol, is about UAH 2 billion.

The First Deputy CEO of Interpipe noted that in the current military situation, it is extremely important for Ukraine’s steel and pipe companies to maintain production volumes. In particular, maintaining and increasing presence in such key foreign markets as the US, EU and Canada is, without exaggeration, a matter of survival for the Ukrainian steel and pipe industries.

Denys Morozov also commented on the return of the 25 percent duty on imports of steel products to the United States under Section 232. According to him, this was a significant blow to the Ukrainian steel industry. Currently, the US market is one of the most important export destinations for Interpipe’s products.

“If this duty is not suspended, Interpipe will lose the American market and a third of its exports. But this will also affect American consumers of steel pipes, as the US domestic market is in short supply,” he explained.

The Ukrainian side raised the issue of negotiations on a free trade agreement between the US and Ukraine. Meanwhile, Ukraine’s trade representative Taras Kachka said that the government is at the initial stage of a dialogue with the United States on the abolition of the 25% duty. Ukrainian steelmakers hope for a positive outcome of these efforts.

In addition, the exemption of Ukrainian steel products from duties and trade restrictive measures imposed by Canada is set to expire in early June. According to Denys Morozov, once the deferral expires, a 37.4% anti-dumping duty will be applied to domestic steel products, which will effectively make any supplies to that country impossible.

The company hopes that the Ukrainian government will appeal to the Canadian side to adopt an exemption for at least 3 years, similar to the one supported by the European Parliament.

If these steps are not taken, the US and Canadian markets will be virtually closed to Ukrainian steelmakers and pipe makers. Exports to the EU alone will not be able to compensate for these losses. Without access to these markets, at least the pipe industry will have to cut production by 30%.

Despite the threat of duties and quotas, Interpipe has opportunities to maintain and grow in the US and European markets, said Denis Morozov. The key factor is R&D – the development, mastering and production of new types of pipe products. The second advantage is plans to continue investing.