European steelmakers are attempting to assess the impact of a US decision to impose 25pc tariffs on steel imports from 23 March, but many questions remain unanswered. The European Commission plans to propose WTO-compatible countermeasures in the coming days.
Protests from industry associations have come thick and fast since the blanket 25pc tariffs were initially proposed a week ago, with Eurofer today calling them "absurd" and Germany's WV Stahl saying the US government is giving its steel sector "unfair competitive advantages".
The UK is also pushing back, with trade secretary Liam Fox planning to meet with US officials in Washington next week to push for UK exemption from the duties. The UK exported around 350,000t of steel to the US last year, accounting for around 7pc of its total exports, according to UK Steel, which today urged the government to work with other EU nations to ensure that a global trade war and more severe consequences are avoided.
Widespread expectations are for European steel exports to the US to drop, and for more seaborne volumes to be redirected from the US to Europe, which the EU's existing trade defence measures have limited powers to curb. But the impact on individual European steelmakers will differ, as their exposure levels vary depending on the structure and focus of their operations.
Austria's Voestalpine already produces around two-thirds of its steel in the US, which would not be directly affected by the tariffs. Overall, the company estimates that only 3pc of its revenue stands to be impacted, and that share is largely generated by sales of high-tech steel products such as high-quality steel strip, advanced seamless tubes for oil and gas exploration, and ultra-high-strength aircraft components, which are largely or completely unavailable in the US and could therefore potentially qualify for exemption.
US commerce secretary Wilbur Ross is expected to unveil a process to file for product-specific exemptions in the next ten days. Steelmakers would need to demonstrate that either there is a lack of sufficient US production capacity for comparable products or that imports are in the interest of national security. The latter gives grounds to presume that US imports of steel slab, which totalled around 8.5mn t in 2017, may be exempted, as there is no merchant slab market in the US and many vital steel products are made from the imported material.
Despite having limited direct exposure to the tariffs, Voestalpine is now examining whether all of its plans for further investment in North America are "economically and politically sensible", chief executive Wolfgang Eder said today, noting that it is not immediately possible to assess the potential consequences of the duties for global markets and free trade owing to the complexity of global economic structures.
Other steelmakers such as Russia's NLMK and Evraz, which have flat steel re-rolling assets in US, also paused their US investment plans in the run-up to yesterday's announcement.
Swedish steelmaker SSAB also produces a significant proportion of its output within the US, with 2.4mn t/yr of combined capacity at its mills in Iowa and Alabama, all of which would be excluded from the tariffs. But it stands to take a hit on exports of steel produced at its plants in Sweden and Finland, which totalled 250,000t in 2017 and for which the US is a key destination.
SSAB plans to seek exemptions from the tariffs. If unsuccessful, it will have to evaluate all aspects of its US-related business, including pricing, investments, logistics and operations, to ensure a way forward, it said.
