European Steel Manufacturers Seek Reductions in Import Quotas

SEATTLE (Scrap Monster): Steel manufacturers in Europe are urging regulators on the continent to reduce steel import quotas, warning that, “The European steel industry’s survival is at further, serious risk” because authorities have not adequately responded to the collapse in demand caused by the pandemic.

In a June 8 statement, Eurofer noted that steel demand has fallen 50 percent since March, and 40 percent of the industry’s workforce in the European Union has been laid off or is working reduced hours, even as China and other countries have maintained high levels of steel production.

“The imminent risk of cheap steel offers flooding the market would hamper our recovery and the survival of one of Europe’s strategic industries – one that sustains 2.6 million direct and indirect jobs in the EU,” Eurofer stated.

In 2018, the EU implemented “safeguard” tariffs – which are still in place – that are triggered when steel imports exceed a certain threshold. This was done in response to concerns that the tariffs imposed by the United States would lead steel-producing countries to dramatically increase their shipments to Europe. Now Eurofer wants regulators to undertake “a crisis-oriented review” of the safeguards and to set a quota level “that reflects actual market conditions.”

“The import quotas should be reduced considerably, and the transfer of unused quotas to subsequent quarters and the access to the residual quotas for countries with their own quotas prevented,” the organization stated.

According to Financial Times, “The coronavirus pandemic is putting China on course to dominate global steel production to an even greater extent than ever before.”

China produced about 54 percent of all of the steel manufactured worldwide last year, but in April of this year – amid the global economic shutdown – that number jumped to 62 percent.

Financial Times noted that China increased its share of global production during the last major financial crunch, the Great Recession, jumping from 38 percent in 2008 to 47 percent in 2009. Even amid this year’s outbreak – and a shrinking economy in the first quarter – it has reportedly kept steel mills running, in some cases at a faster pace than before. Now, as the nation returns to normal, domestic demand is increasing.

“China is on the road to recovery,” an analyst with CRU told the publication. “The rest of the world is where there is a problem. The lockdown happened later and demand is poor.”

Courtesy: AIIS