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Explaining The EU Steel Safeguard
Feb 03, 2019

The EU will implement its definitive steel safeguard in early February, designed to prevent the redirection of imports to the European market as a result of US steel tariffs introduced last year. Longs imports will see the biggest impact from the new quota, while flats, and particularly hot-rolled coil, could be largely unaffected. Cold-rolled coil and hot-dip galvanised imports from established sources could slip, but there is scope for growth in imports from new suppliers. Since early December, Argus has been publishing market-leading and market-moving coverage of the safeguard, its likely structure and impact on the market. Argus will continue to update its coverage of the safeguard as developments unfold.

EU steel quota will be quarterly and national

The European Commission’s definitive safeguard on imported steel will apply quarterly and country-by-country for all products except hot-rolled coil (HRC).

All products will have a quarterly allocation rather than annual, as is the case under the preliminary tariff-rate quota. It is unclear how this quota will be calculated but it is likely to be based on the average quarterly volume imported by each country from 2015-17, as opposed to dividing a yearly quota into four.

“We all agree quarterly quotas are a bit more restrictive than annual because their implementation and working with a quarterly quota is more difficult, it is more of a burden,” a Brussels-based market participant said. Logistically a quarterly quota, broken down by country, will be more difficult to administer.

As the safeguard concerns fairly traded imports, the commission has to walk a thin line responding to diversion caused by the US Section 232 measure — which steel association Eurofer estimates at a rate of 61pc — rather than adding additional restrictions on fairly traded steel that would be detrimental to end-users.

When a quarterly quota is under-utilised, the volume is rolled over into the next quarter.