Steel buyers from the EU fear price increases

The European steel market is awaiting a possible settlement of the dispute on steel tariffs under section 232 on November 1, which could restore the flexibility of vital trade routes between Europe and the United States in accordance with WTO rules.

If the export duty on steel from Europe is lifted, domestic buyers fear another surge in local steel prices at a time when hot coil prices are still above € 1,100 per tonne ex-works and stock levels in the European domestic market remain extremely low.

According to a joint statement released after the June US-EU summit, the US and EU previously agreed to work together to resolve a metals trade dispute over the earlier section 232 imposition of steel and aluminum tariffs on European exporters by the end of the year. 15.

However, reaching a settlement could prove difficult as steel tariffs are an integral part of the US steel industry, especially in high-performing states such as Ohio, Pennsylvania and Indiana.

There is currently no steel quota system in the US, while steel safeguards are firmly entrenched in the domestic European market. Effective July 1, European guarantees for steel were extended for another three years and included only a slight increase of 3% to existing quotas.

EU steel market reacts, fears grow over tariff decision

The response to a possible elimination of Section 232 tariffs has been mixed from sources, with selling side participants seeking to benefit from US arbitration, while higher domestic prices could create financial problems for buyers already trying to extend credit limits.

“The abolition of the 25% tax on imports of EU materials in the US could lead to an increase in exports from Europe and higher prices here. Anyone with access to good logistics will benefit from this, ”said the German distributor.

In the Benelux, a service center source said Section 232 tariffs pose a “real threat” to Europe, but said higher domestic prices are needed to finance cleaner steel production.

“I think the EU is trying to keep prices high in order to finance the transition to CO2 neutral steel production; otherwise, the EU and individual states will have to subsidize huge amounts to keep the steel industry in place, ”the source said. said. The source added that China is monitoring the situation very closely.

Should the tariff be canceled, the Benelux buyer also accepted the possibility of raising European prices, but said it was unlikely that the Biden administration could be easily shaken.

“I have a feeling that [President] Biden is pursuing the same policy as Trump – America comes first – only he says it more friendly!” the buyer said.

Former President Trump imposed a 25% steel tariff and a 10% aluminum tariff on metal imports from most countries under section 232 in March 2018. The tariff was imposed after a Commerce investigation found that the surge in steel and aluminum imports posed a threat to national security.

Mills was largely optimistic about the tariff discussions, opting to refrain from raising prices pending a possible cancellation of Article 232. However, European manufacturers are in no rush to initiate another price spike and current market dynamics are working in their favor, a source from Benelux distributors said.

“Plants keep prices. They have good order books, September is sold out. So, unless something significant happens, such as a section 232 decision, I don’t expect any changes, ”he said.

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