New EU steel safeguards quotas softer than Eurofer ask

Amendments to the EU's steel safeguard quotas, after a European Commission review initiated in December, are far less stringent than European steel association Eurofer's requests.

The proposed changes will see the total duty-free hot-rolled coil (HRC) quota volume reduced from 1 April to 1.9mn t/quarter, representing a 12.1pc cut quarter on quarter. The reduction is the result of the decision to remove up to 65pc of redistributed Russian volumes, owing to sanctions after the conflict in Ukraine. Those tonnages will also be taken out of the plate, wire rod and hollow sections quotas. The largest cut in volumes on HRC is for India, with duty-free volume falling by around 23pc.

In addition, the cap to the "other countries" HRC quota access every quarter is reduced to 13pc from 15pc previously. There is now a cap introduced of 13pc for the cold-rolled coil (CRC) quotas, of 20pc for 4B hot-dipped galvanised and 25pc for 4A HDG allocations, as well as 20pc for rebar. The caps for other products are in a range of 15-30pc.

The commission is removing the access to residual quota volumes in the final quarter of the measures' year, April-June for HRC, CRC and 4A HDG. Importers will get up to 30pc access in the 4B residual volumes. There will no longer be carry over of unused quota volumes from quarter to quarter for several products, including HRC, CRC, 4A HDG, plate and wire rod, but the mechanism will remain in place for 4B HDG and rebar. The commission will also reduce the annual quotas liberalisation rate to 0.1pc from 1pc. The latter two changes will be applicable from 1 July — all other changes will be in force from 1 April.

There will also be a new 1B quota for HRC for imports under HS code 7212 60 00 with negligible volumes, following crowding out of the highly specific product, identified by one interested party.

Notably, there have been very few changes to the developing countries list to which the measures do not apply, with Indonesia, Malaysia, Saudi Arabia, China and Thailand still exempt from the HRC quotas.

Eurofer was seeking a 50pc reduction in flat product quotas as well as a 32-41pc increase in the safeguard duty applicable to material outside allocations. It also proposed a melt-and-pour clause on Chinese steel, and a cut in the HRC other countries' cap to 7.5pc, not the 13pc put forward by the commission.

Multiple sell-side sources had repeatedly told Argus the changes would be "meaningful", with the commission understanding the plight of European mills.

However, the changes are substantially less drastic than those requested by Eurofer.

The review has been seen as something of a damp squib by sellers, and even buyers, which were hoping severe import restrictions would help lift prices. A source close to Eurofer said he was "shocked" by the results, and that doors "remain wide open" to imports. Another mill source termed the review a "big fat nothing".

The safeguard will run until 30 June 2026 and there will be consultations on the review over 11-18 March.

By Lora Stoyanova and Colin Richardson