This is a step towards further solving the problem of global overcapacity
The launch of the review of safeguard measures on steel products announced by the European Commission is an important step towards solving the problem of overcapacity in the global steel market, which poses risks to the sustainability of the European steel industry. This is stated in a statement from the European Steel Association (EUROFER).
«The conditions for initiating such a procedure are undeniable. US Section 232 tariffs are still in effect, while we see protectionist measures spreading to other markets and excess capacity growing around the world. All of this represents significant challenges for European steel producers,” said Axel Eggert, CEO of EUROFER.
According to him, China is now very close to the level of mass exports of a decade ago, and the current global excess capacity has reached 600 million tons, and another 150 million will be ordered in the next three years.
According to the association, the unprecedented expansion of Chinese steel capacity over the past two decades has led to a profound imbalance in global steel markets.
EUROFER recalled that for the first time the consequences of this were deeply felt during the steel crisis of 2015-2016. At that time, domestic demand for steel stagnated in China, which led to a significant increase in exports from that country, totaling around 100 million tons. Currently, data indicates that the same scenario could potentially repeat itself – in 2023, China's steel exports reached 94 million tons.
The situation is complicated by the fact that new dynamics of excess steel capacity are emerging at a regional level, particularly in Southeast Asia (ASEAN countries, India), the Middle East and North Africa. This is changing the structure of commerce. Traditional exporting countries are being squeezed out and face reduced export opportunities and more closed markets, forcing them to look for alternatives.
As a result, the association explained, the EU became the main target of trade reorientation.
Axel Eggert noted that safeguard measures are a legitimate and indispensable tool to stabilize the EU steel market and ensure the sustainability of the European steel industry, which is on the path to decarbonization.
“Large-scale and market-disrupting increases in imports from third countries, most with little or no climate ambition, further undermine the transition period. We hope that the Commission will carefully assess the global situation and take the necessary measures to protect European steel production”, he concluded.
As the GMK Center previously reported, EU safeguard measures on certain steel products, which were due to expire in mid-2024, will be reviewed for possible extension. The new investigation was launched at the request of 14 member states of the bloc due to the influx of carbon-intensive imports that threaten the sustainability of the European steel industry.
