The European Commission's new safeguard measures, which entered into force on July 1, have had a significant impact on the steel market, with the restructuring of country-specific quotas, the introduction of additional quota mechanisms under Free Trade Agreements (FTAs), the increase in the out-of-quota duty to 50 percent, and bureaucratic delays. European steel producers and traders speaking to SteelOrbis shared their views on the measures, which have now been in effect for more than a month.
European steel market players view the new EU steel import quota system as an important step in reducing import pressure, while the actual impact is expected to become clearer over the coming quarters. Producers expect prices to remain strong, while they see inflation as one of the most challenging factors the market will have to manage.
Egypt has emerged as one of the beneficiaries of the quota allocation, while Algeria has been assigned a lower official quota and China's quota has been reduced to a very low level. In addition, according to a producer speaking to SteelOrbis, although Turkey's quota has been reduced on paper, the additional quota mechanism available to countries with FTAs will allow Turkish suppliers to offset a significant portion of the access they have lost.
According to producers, the increase in the out-of-quota duty from 25 percent to 50 percent will raise risks, particularly for companies importing high tonnages. However, the additional quota opportunities granted to countries that have free trade agreements with the EU could limit the impact of the quota cuts. With lower quota volumes and the 50 percent duty, importers are expected to be more cautious about clearing large volumes of material through customs.
Overall, while some producers view the measures positively, others believe that the quota cuts are insufficient and that mechanisms within the system that continue to allow imports reduce the effectiveness of the protection. Meanwhile, the outlook for flat steel products is said to be more negative.
Assofermet criticizes complexity of new quota mechanism
Assofermet president Paolo Sangoi said the association has serious criticisms of the new regulation, arguing that it contains numerous problems, including issues that raise questions regarding constitutional legitimacy and compliance with World Trade Organization rules.
According to Sangoi, one of the main concerns is the new quota allocation mechanism, which combines country-specific quotas with two separate “Other Countries” quotas. Sangoi stated that one of these additional quotas is accessible only to countries that already benefit from country-specific quotas, while the other is reserved for certain countries. According to Assofermet, this structure could lead to significant market imbalances by effectively giving an advantage to countries that exhaust their own quotas first, as they can subsequently access additional quota tonnages.
Assofermet also criticized the distribution of quotas among exporting countries. Speaking to SteelOrbis, Sangoi stated that relatively high quotas had been allocated to some countries that are less attractive to European buyers due to being subject to antidumping measures. By contrast, the association pointed out that quota tonnages for some countries that have traditionally supplied high-quality steel to the EU have been significantly reduced.
In addition, the association linked the publication of quota tonnages only one day before the regulation entered into force to the complexity of the new system, arguing that this increased the likelihood of calculation errors and resulted in quota allocations that do not adequately reflect actual trade flows or the needs of the European market.
Feralpi and Federacciai satisfied with quota allocation
Feralpi and Italian steel producers' association Federacciai stated that they are highly satisfied with the European Commission's quota allocation decisions. According to Feralpi, the calculation of quotas based on pre-pandemic import levels indicates that the European Commission carried out a detailed assessment.
Feralpi attributed the late publication of the quota allocations primarily to administrative procedures in Europe and the need to carefully assess the EU's trade and institutional relations with its trading partners.
