May 06, 2021
UK STEEL URGES GOVERNMENT TO EXTEND STEEL SAFEGUARDS
2021-07-13
UK Steel is calling on the UK government to extend steel safeguards beyond their current June 2021 expiry date, the UK steel association told S&P Global Platts on May 5.
The UK has had the safeguards in place as part of the EU since 2018 and then transitioned them into UK law in January 2021 to avoid trade diversions as US introduced steel tariffs.
“We are confident the EU and US will retain their equivalent measures. If the UK unilaterally removes its measures, it will open our market to import surges as the sector recovers from COVID-19, and crucially at a time when our exports to the EU and US will still be subject to tariffs and quotas,” the association stated.
According to the association, before the introduction of the EU steel safeguards, UK imports of steel went up by 25% between 2013 and 2017, but because of the continued problems of global overcapacity, and the increased use of import restrictions around the world they expect that it is almost certain the increase will resume if the UK unilaterally removes measures.
The association pointed out that as the measures allow for tariff-free imports equivalent to 111% of historic levels, with further relaxations every year, this could give enough rooms to import some products if needed.
“In general the UK quotas were designed to allow for an average 61% import penetration level of 2015-17 demand levels. This will have been liberalized to allow for import penetration levels of closer to 70% of 2019 demand, and 90% of 2020’s severely reduced demand levels. Even with a modest recovery next year we would expect further liberalized quotas to allow for 80-85% penetration levels,” the UK Steel Policy Manager explained to Platts on May 5.
ISTA, the UK International Steel Trade Association, is against the continuation of the Steel Safeguard Measures. “Here in the UK, as UK producers cannot produce enough material in most product category groups to service the independent steel service centers and stockholders, without imports over the last twelve months many [service centers] may not have survived,” an ISTA spokesman said. “Service centers had to rely on imported material, mainly from outside of the EU, as European mills have cut back severely their own production over the last year.”
Some products were very close to extinguishing all their allocated quota very quickly such as the large welded tubes, hollow sections and organic coated steel (OCS) products.
Domestic market sources said some large service centers have mixed views as most of them, although they have challenges finding material, are making good profit margins and benefiting from high prices.
The UK government is expected to determine whether to maintain the safeguard by June, but it is understood that a date has not been decided yet. For the UK Safeguards, the Trade Remedies Investigations Directorate (TRID) will be making an independent determination, expected possibly next week. Then this recommendation goes to the Department for International Trade and the Trade Secretary will accept or reject it.
For the EU Safeguards the decision is made by the European Commission and will likely be finalized after the UK, or at least later than TRID’s determination as is expected in July.
“While the decisions are separate, the EC’s decision will impact the UK’s ability to export to the EU so a situation where the EU extends the measure but the UK does not would be detrimental for the UK steel sector,” the UK Steel Policy Manager added.
According to worldsteel data, the UK produces 7.2 million mt of crude steel a year, around 71% of the UK’s annual requirement.
A DIT spokesperson when reached by Platts on May 5 said that they are working to protect the steel industry and trade remedies are an important element of the international trade framework:
“The Trade Remedies Investigations Directorate (TRID) is currently reviewing steel safeguard measures on 19 steel product categories that we transitioned to ensure they reflect the requirements of the United Kingdom. The review will conclude before the measures expire at the end of June. TRID has yet to conclude its analysis and as such it is not appropriate or possible for it to speculate about the outcome of the review at this stage.”
— Annalisa Villa
Source: Eurometal
