European steelmakers' association Eurofer, has strongly voiced its opposition to the planned further relaxation of steel safeguard measures. European steel demand this year is expected to decline compared with 2018, Kallanish learns from a briefing by the association.
As planned in the definitive safeguard measures applied since February this year, in July the tax-free quotas for imports are set to increase by 5%. This increase in volumes follows a similar increase already applied at the beginning of this year as permanent measures were imposed.
The association believes that a 10% increase in quotas when European steel demand is struggling is unjustifiable. Eurofer expects apparent demand to decline by -0.4% year-on-year in 2019 on the back of lower demand from steel-using sectors.
The current safeguard system is set to be reviewed between the end of May and the beginning of June. While major changes are not expected by market sources, Eurofer is still hoping that the general quota increase could be amended. At the same time other associations, representing steel users and importers, are voicing concerns over the need to massively increase quotas for specific products such as wire rod and HDG for the automotive sector.
The WTO requires that safeguard measures are in some way relaxed as the years proceed. Eurofer believes however that this easing could be done in other ways than by increasing the quotas by 5% each year.
Eurofer says that the market situation when safeguard measures were first discussed was very different from now. In mid-last year the market was benefitting from good demand and firm prices but now that situation has completely reversed. An increase in import quotas while demand is shrinking is not justifiable, the association believes.