European Commission has imposed provisional safeguard measures on imports of 23 steel products categories for a maximum of 200 days. Tariffs of 25% will come into force once the steel imports exceed the average of imports over the last three years. The EU safeguard measures have been taken in response to the 25% import duties arguing that due to trade diversion the high inflow of steel is harming the EU steel industry.
Commodity Inside View:
The EC based its decision on the findings that steel products have been diverted from the US to the EU. It has already responded to the US tariffs by imposing tariffs on €2.8 billion of US imports, including whiskey and motor bikes. The EU has also challenged the US tariffs at the World Trade Organisation.
The EU allocated the quota on a first come first serve basis and had not considered individual exporting countries. However, the leading steel exporters to the EU are China, India, Russia, South Korea, Turkey and Ukraine. Commodity Inside understands that these measures would have significant implications for countries such as Russia and Turkey where a portion of their exports are comprised of intracompany transfers.
Commodity Inside anticipates that steel exports to the EU will increase significantly in the short terms where buyers will take positions and replenish their stocks while suppliers will rush to exports more to fill the quota. Consequently, steel prices are likely to remain subdued compounded further by upcoming summer holidays.
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