Revision of EU protective measures will lead to a shortage of hot-rolled steel – Assofermet

The revision of the EU’s residual quotas will lead to an annual deficit of 1.63 million tons of hot rolled steel (HRC) in the bloc. The Italian industry association Assofermet warns of this.

At the end of May, the European Union officially notified the World Trade Organization (WTO) that safeguard measures on steel imports would be extended for another two years, until the end of June 2026. The European Commission is also imposing a 15 percent restriction on imports of hot-rolled coils and wire rod within the quarterly quota in the “other countries” category for any individual country.

Assofermet believes that the upcoming shortage will have catastrophic consequences for several steel-consuming sectors, including the automotive, construction, engineering and manufacturing industries. This will lead to a loss of competitiveness for companies.

In 2023, Vietnam, Japan, Taiwan, and Egypt, which are included in the “other countries” category, sold 3.9 million tons of HRC to Europe. The annual flow from these four countries may decrease to 2.26 million tons.

«These are steel grades that are not available in sufficient quantities in the EU. For this reason, imports are necessary to guarantee the sector the necessary supplies… The extension of safeguard measures for another 24 months means duplication with the cross-border carbon adjustment mechanism, which will lead to de facto double taxation,” said Paolo Sangoi, President of Assofermet.

The Association notes that the revision of safeguard measures is based on a comparison with the data collected in 2015-2017. At the same time, this comparison is no longer relevant, as several countries that were included in the list of EU suppliers are now under embargoes or sanctions and supply raw materials to other regions. The consequences could be an uncontrolled rise in the cost of raw materials due to duties, long waits for customs clearance at the beginning of each quarter, financial difficulties for importers, and port congestion.

According to Sangoya, it is important that the European Commission guarantees the supply of steel needed by European production. Assofermet is actively cooperating with the Italian and EU institutions and is ready to illustrate once again the serious consequences of the approval of safeguard measures in the form notified to the WTO.

As GMK Center reported earlier, traders are concerned about the EU’s decision to extend safeguard measures on steel imports, especially the proposal to limit the use of the quota for other countries for hot-rolled steel. According to market participants, the planned restriction for any individual exporter of hot-rolled plates will result in countries that traditionally supply large volumes of products to the EU being forced to reduce supplies or face duties.