European Union Proposes to reduce Quotas on Steel Imports from Existing 5% to 3%

Following the U.S. tariffs on steel and aluminium in March last year in a bid to protect the country from the influx of cheaper imports, European Union (EU) had also placed temporary measures in the form of safeguards last year.

These safeguard measures set quotas for 26 grades of steel, including stainless, and were set at the average level of imports in 2015-2017, plus 5%. They allowed for a further 5% hike due in July and the same again in July 2020.

However, given weak steel demand in the region coupled with constant complaints from the Europe's steel market that the region's market cannot bear the planned increase in quotas, the European Commission has proposed that this year hike in quota should be 3% instead of 5% with effect from 1 October.

The revised measures also involve limiting any one country to a 30% share of imports of hot-rolled flat steel during a quarter, a move that may hit Germany before any other (it being the region's largest consumer by some margin). Another country, Turkey is also cited as one likely to suffer because of this move as it is a significant supplier (importer) of steel products, along with stainless steel from Indonesia.

Supporting EU's proposal is the region's steel imports data, the imports of finished steel products in EU this year rose by 12% in a market that grew by only 3.3%, effectively increasing import penetration and depressing prices for domestic producers. E.U. steel association EUROFER estimates apparent steel consumption, which includes inventory changes, will fall by 0.6% this year and rise by 1.4% in 2020.

Here is the list of changes with regards to EU's safeguard quotas that are expected from 1 October 2019:

1. Indonesia is no longer exempted from the safeguards for stainless flat products and seamless tubes.

2. Individual countries cannot use more than 30% of the global quota, for products with a global quota (HR coil, large welded tubes).

3. The large welded tubes product group will receive a global quota in line with the hot rolled coil quota.

4. For rebar and wire rod individual countries cannot use more than 30% of the Other Countries quota once it is made available to countries that have filled their own quotas in the last quarter of the quota period (calendar Q2).

5. The annual increase of the quota volume per period will be reduced from 5% to 3%. This would apply to the second half of the current quota period starting from 1 October and would retroactively lower the total available quota volume.

6. The category A (non-automotive) metallic coated sheet quota has been expanded to include the CN codes previously unique to category B metallic coated sheet quotas. Category B will remain untouched and will apply to the same trade codes as previously.

7. Material imported under the category B (automotive grade) metallic coated sheet quota will need to prove end-use in the automotive sector.

8. India will - uniquely - have its metallic coated sheet quotas merged into one.