EU Strengthens Steel Import Restrictions to Stabilize Market
The European Union (EU) has decided to extend safeguard measures on steel imports for an additional two years. This extension includes a new 15% restriction on imports of hot-rolled coils and wire rods.
The EU has officially notified the World Trade Organization (WTO) that safeguard measures on steel imports will be extended until the end of June 2026. Additionally, the European Commission announced a 15% restriction on imports of hot-rolled coils and wire rods within the quarterly quota for individual countries.
The rate of tariff rate quota (TRQ) liberalization will be reduced from the current 4% to 1% over the next two years. According to the report, the past pace of liberalization has significantly outpaced changes in consumption. While TRQs have increased by nearly 25% since the measures were introduced, consumption has decreased by 17% during the same period. This trend has greatly widened the gap between TRQ levels and market demand.
The new safeguard measures will come into effect on July 1, 2024. EU investigations revealed noticeable changes in import flow structures, impacting the effectiveness of the safeguards. As a result, exports from traditional suppliers to the EU have significantly decreased in some categories, while exports from new origin countries have sharply increased under the same quotas.
Additionally, the surge in imports from new origin countries is attributed to overproduction in certain regions and a significant increase in Chinese exports. To ensure the effectiveness of the measures and maintain traditional trade flows, adjustments in two product categories are deemed necessary.
Industry sources indicate that EU hot-rolled coil imports under the "other countries" quota come from five major sources, with four supplying more than 15% of the quota: Japan (30% in Q1 2024), Taiwan (25%), Vietnam (21%), and Egypt (17%).
A source stated, "Limiting suppliers from a single country to 15% will prevent full utilization of the 'other countries' quarterly quota. This may provide opportunities for countries like Indonesia (7%) to increase their supply. However, the utilization rate of the 'other countries' quota is unlikely to exceed 75-80% from the second quarter onwards."
This decision will allow for a more even use of quotas from other countries. Recently, the most popular sources of flat products were primarily Asian countries like India, which offered the lowest prices. Products from other countries, such as Turkey, the UK, or Serbia, which have individual country quotas, saw much less demand. Now, these countries or European competitors are expected to secure additional space in the quarterly quota.
Additionally, Italy has introduced a new experimental procedure for quotas opened since April 1 this year, allowing for the refusal of import operations if quotas are exhausted.
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