The European Commission has announced the extension of the EU’s safeguard measures encompassing 26 steel product categories for another three years until June 30, 2024, preserving traditional trade flows on a per-product-category basis. The Commission has also increased the quota volumes by three percent, and a 25 percent tariff duty will be applied on the products if the tariff rate quotas are exceeded. There will be a review to determine whether the safeguard measures should not be terminated by June 30, 2023 after two years of the extension.
According to the Commission, the share of imports decreased by 13 percent in 2019 and by 27 percent in 2020 when compared to 2018. The Commission noted that, although the market share of imports gradually decreased over the period concerned, the market share of imports remained at the same level in 2020 when compared to 2017, prior to the imposition of the safeguard measure. Furthermore, the average market share of imports during the period under the safeguard was higher than in the years prior to its imposition.
Meanwhile, the Commission also noted that around 1 million mt of quota, which is 36 percent of the total tariff rate quotas, remains unused less than a month and a half prior to the end of the safeguard measures on June 30, 2021. This shows that users have had the possibility to source sufficient free-of-duty steel from multiple sources and that the safeguard measures have not limited effective supply.
Market sources expect the EU to be slightly more active in buying since the extension is official now. India was selling for the third quarter quota before the official announcement and now there are big volumes waiting at customs to be cleared as of July. Once these shipments enter the region, it will be clearer to what extent the third quarter quota has been filled.
“The conditions that required the launch of the safeguard initially are still very much present - including global steel overcapacity and US Section 232. This extension provides ample opportunity for users to source material they might require from abroad, as the tariff-free quota level is now at least 15 percent higher than the record import levels on which the safeguard’s tariff rate quota is set - the years 2015-2017,” Axel Eggert, director general of EUROFER, stated, commenting on the extension of the measures.