The decision on whether to extend the EU Safeguard measures to certain steel products or end it early is due shortly. The EC recently announced the TRQ for steel products between the UK and Ireland. And the ISSF clearly sees a significant increase in stainless steel consumption coming in 2024.
EU Safeguard: What is actually going on?
Whether the EU Safeguard measures on certain steel products will be extended or possibly even lifted has to be decided by the European Commission and the EU Member States by 30 June 2023.
Once again a numbers game
Although EUROFER continues to believe that imports of steel and stainless steel have increased since Safeguard was introduced, as always it depends on how you look at it.
Looking back to 2018, which led to the imposition of Section 232 duties in the United States and prompted calls for an EU Safeguard measure on certain steel products in the first place, imports into the EU have fallen by more than 6% since 2018 and under HS Codes 72 and 73. If one were to apply a liberalization rate of 3% per year here, starting from 2018, then almost 17% fewer steel products would even have been imported in 2022.
With the same liberalization rate of 3% and with regard to stainless steel, except in one HS Code group (which we did not consider here), over 7% less stainless steel would have been imported than should have been imported.
So where do EUROFER’s strange figures come from?
The rapidly rising energy costs, above all gas and electricity prices, had led in 2022 to the fact that the EU stainless steel producers, for example, at least according to their announcements, had switched off 3 million tonnes (approx. 50% of the total capacity in the EU) of melt shop capacity in autumn 2022. Already in 2021, there were serious supply problems for steel and stainless steel in the EU because the European producers could not or would not deliver. At the same time, European industry was riding an economic miracle wave after the end of most pandemic measures.
So European consumers had no choice but to look outside Europe and procure important raw materials there. Otherwise, production would have come to a standstill. Blaming this on the importers and the downstream is once again a sign of the perfidious lobbying of the European steel producers.
Energy costs in Europe have fallen dramatically
Since 2022, energy costs have fallen dramatically. In part, they have fallen below the level before the outbreak of the war in Ukraine in the spring of 2022. We can therefore speak of a black swan that has now lost its terror.
Germany: Tax billions once again beckon for big industry
However, since billions in subsidies are still at stake and e.g. the steel producers in Germany are waiting for and will probably get an electricity price cap financed by billions in taxes from the Federal Minister of Economics, Robert Habeck, The Greens, the situation remains artificially bad and is further fuelled by measures of the lobby associations. To the detriment of small and medium-sized enterprises and, in the end, of the European citizen. Instead of renegotiating energy prices at the industry level, once again the taxpayer has to do it.
Best annual results ever?
What is also interesting is that some of the large steel and stainless steel producers in Europe are reporting the best annual results ever, despite allegedly increased imports and allegedly stifling energy costs. So it can’t be all that bad, can it?
What comes after the Safeguard decision?
We look forward to the price development as soon as the decision to extend the Safeguard measure has been announced. So far, no agreement with the United States in the steel dispute is in sight and the Carbon Border Tax CBAM will not finally come into effect until 2026. There will be no end to Safeguard as long as the Section 232 tariffs are in force and no alternative to the protection of European overcapacity has been found – Germany alone, as the largest steel producer in the EU, cannot and will not afford an end to the safeguard measure.
Safeguard quotas for UK and Ireland
The EU has also just announced Safeguard quotas for steel-related trade between the UK and Ireland.