Steel Safeguard Extension Ends June Next Year Countries cut import volume by 15% by reducing quota by each country South Korea, the top EU exporter, also has the right to be affected EU companies devastated on low-cost products from China ArcelorMittal to close 2 plants in France ThyssenKruppsteel cuts 11,000 jobs
“The steel industry has always been a key engine of European prosperity. The next generation of eco-friendly steel should continue to be produced in Europe.” (Urzula von der Leyen, European Commission President)
Like the Trump administration in the U.S., the European Union (EU) locks up the steel industry by nationalizing it. Currently, it is poised to reduce imports by up to 15% per year by unilaterally reducing quotas subject to tariff-free tariffs by each country. Korea, which enjoys the third-largest steel exporter in the EU market, is expected to suffer considerable damage.
Stephane Sejurne, the senior vice president of EU prosperity and industrial strategy, held a press conference in Brussels, Belgium, on the afternoon of the 19th (local time) and announced the ‘Steel and Metal Industrial Action Plan’.
The Industrial Action Plan covers various measures to protect the European steel industry. Representatively, from the 1st of next month, it plans to reduce the amount of imports allocated by each country under steel safeguards. Since 2018, the EU has imposed 25% tariffs on excess supplies after applying low or zero tariffs by setting quotas for each country.
The safeguard measure is scheduled to end in June next year, and the strategy is to increase it again like a rubber band and reduce the quota by 15% more than now to give European steelmakers a breather.
As of last year, South Korea was in the top five in major EU steel items. According to the EU Commission, Turkiye, Ukraine, Vietnam, India, South Korea and China account for 58% of the EU’s total imports based on the hot rolled carbon steel coil (HS7213).
Among the various steel products, the industry believes that hot-rolled and plywood, Korea’s main exports, will be the most affected. Without specifying how much each country’s quota will be reduced, the EU proposed a “maximum of 15%” of its total imports as a reduction target on the same day.
The EU also plans to consider whether to expand safeguards restrictions limited to steel to aluminum products in the future and expand the application of the carbon border adjustment system (CBAM), also known as the ‘carbon tax’.
CBAM is a system that imposes a kind of tax by calculating carbon emission estimates from the process of producing six-item products, including cement, electricity, fertilizer, iron and steel, aluminum, and hydrogen, which are produced outside the EU and imported into the EU.
Only carbon emissions reporting obligations will be granted until the end of this year, but from next year, the cost burden on exporters will increase as CBAM certificates corresponding to excess leakage must be purchased and submitted.
Earlier in December last year, Europe’s ArcelorMittal, the world’s second-largest steelmaker, shocked the world by announcing that it would close two plants in France, shaken by a low-cost Chinese steel offensive.
In line with this, the EU Commission, which was surprised to hear complaints from steel and metal companies in the region and announced future countermeasures aimed at reducing quotas on the same day, when ThyssenKrupp Steel, Germany, also announced its largest-ever workforce reduction plan of 11,000.
Coincidentally, the European Commission announced a roadmap for European rearmament by 2030. In the process of greatly expanding the production capacity of European weapons and purchasing power in the region, it is interpreted that it will seek to revive the European steel industry together.
