The European Commission will implement a “melted and poured rule” to ensure the effectiveness of its trade defense measures against a growing trend whereby non-EU exporters attempt to circumvent the measures, according to a draft by the European Commission on the Steel and Metals Action Plan due this week.
According to the rule, the origin of the good is determined no longer by the traditional non-preferential rules of origin, but by the location at which the metal is originally melted, regardless of where it was further processed, eliminating the possibility to change the origin of the product by performing minimal transformation and will give more clarity in tracing the origin of the product.
The intention to introduce such a measure has triggered concerns among steel sellers to the EU since the restriction is considered to mainly target the suppliers which are processing materials of origins subject to a high level of duty in the EU markets and sending them as imports to the EU. In particular, there are concerns regarding coated and CR imports from countries like Turkey and Vietnam, which are known for their large imports of Chinese HRC to be used feedstock for re-rolling.
Particularly, Turkish producers are worried that the necessity to use domestically produced HRC instead of cheap imports from China will affect their profitability and, taking into account the inward processing regime, under which the import tax on any steel is not paid if it is processed and exported, the imports of HRC from China to Turkey will like decline significantly from their current levels. “[In EU] we had the duty, then the quota, then, rather unexpectedly, a cap for the “others” quota, and now the threat of impossibility to use Chinese import feedstock is quite vivid. For slabs there is no issue, but for HRC it really is a big deal,” a Turkish source told SteelOrbis. According to customs data, in 2024 Turkey imported close to 1.7 million mt of HRC from China, up nine percent year on year. In October last year, Turkey slapped China with AD rates of 17 percent to 43.31 percent for HRC.
In addition, Vietnam may be facing similar challenges since it is historically a large importer of HRC from China and a large supplier of flats to the EU. However, since Vietnam specifically had already faced similar issues when using Chinese origin feedstock while selling coated and cold rolled steel to the US, some market sources believe that, compared to Turkey, the impact on Vietnam will be a milder one. “Since Vietnam has imposed AD against Chinese HRC there will be less of a problem. And let’s face the reality - the same situation Vietnam has been facing with US CRC and HDG, so those who export they have actually been avoiding using Chinese HRC for a very long time [using local or Japanese, etc.] So, the real problem will be more for Turkey than Vietnam,” a market source told SteelOrbis. According to sources, in 2024 Vietnam imported around 9.03 million mt of HRC from China, a 37.2 percent increase year on year. The rise in imports triggered a trade case which resulted in AD rates on Chinese HRC in Vietnam ranging from 19.38 percent to 27.83 percent, effective from March 7, 2025, for 120 days.
The European Commission expressed that it will remain vigilant, as overcapacities created under non-market conditions may also lead to unrelated market-based producers in other third countries exporting quantities to the EU which are purchased from their domestic or other traditional non-European markets. Therefore, the commission will enhance the monitoring of trade flows and will actively initiate investigations based on a “threat of injury” to protect the European steel industry.
Meanwhile, the draft noted that by the third quarter of 2025, the EC will propose a long-term measure providing an equivalent level of protection to the EU’s steel industry as the current measures that will expire on June 30, 2026. The new measures are expected to be in force in time to replace the current safeguard measures and provide the same degree of defense against negative trade-related effects resulting from global overcapacities.