EU extends steel safeguards for 2 more years, limits imports from Southeast Asia

The European Union (EU) has extended the current steel safeguard measures for two more years, until June 2026, in a move to protect the Union's steel industry. This follows an investigation requested by 14 EU member states that confirmed the continued need for these protections. The safeguards were adjusted to reflect current market conditions, including high global steel production, rising exports from China, increased trade restrictions by other countries, and a decrease in steel demand within the EU.

The European Commission found a surge in steel imports from Southeast Asia (Vietnam, Indonesia, Malaysia) and Japan in 2023. This happened because China, a major steel exporter, had increased its presence in those Asian markets. As a result, steel producers in those countries looked for new markets to sell their excess production, and the EU was, of course, one of them. Therefore, imports increased even though steel demand in the EU was weak.

The adjustments will take effect in July 2024, and the safeguards will expire in June 2026, the maximum allowed under international trade rules. The Commission may revisit the safeguards before then if necessary. In addition, the Commission has also implemented 15% cap per origin in the "other country" hot rolled coil (HRC) tariff-rate quota.

"During the past safeguard period, the global steel market saw excess capacity increasing by nearly 50 million tonnes (mnt), from 514 mnt in 2019 up to close to 560 mnt in 2023. This volume is four times the total steel demand of the EU. Furthermore, approximately 158 mnt of new capacity are potentially coming on stream until 2026, while steel demand is currently growing by only around 36 mnt per year," Eurofer said in a statement.

The safeguard duty rate remains at 25% for imports into the EU above quota levels. For India, the quarterly hot-rolled coil and strip quota for July-September 2024 and October-December 2024 are 301,704 tonnes (t) each and for January-March 2025 and April-June 2025 are 295,145t and 298,424t, respectively.

Outlook

While the extended safeguards offer a safety net for the EU's steel industry, long-term solutions might be needed to address the issue of global excess capacity and ensure a sustainable steel market. Moreover, Indian exporters will need to closely monitor market developments and devise their strategies accordingly.