European auto group criticizes EU steel import quota cut proposal

The European Automobile Manufacturers' Association (ACEA) has criticized on Oct. 8 the European Commission's new proposal to reduce steel import quotas to sustain domestic steel producers, as these could negatively impact the car industry's competitiveness and increase overall inflation.

ACEA underlined that the changing of key safeguard parameters, in particular the 47% reduction of the import tariffs-free import volumes to 18.3 million mt and the doubling of the out-of-quota tariff to 50%, will significantly reduce the possibility of relieving pressure in the European market through imports.

In addition, according to ACEA, a new rule of origin based on the "melt and pour" principle will further restrict imports and create a massive administrative burden for European users of imported steel products.

ACEA pointed out that the automobile industry sources approximately 90% of its direct steel purchases in the EU and is most concerned about the inflationary impact that an effective continuation of the safeguard will have on European market prices.

ACEA said that the Commission should evaluate sectors like automotive individually, as manufacturers, despite relying heavily on domestic steel, still require specific imports, with the Association underlining how quotas for automotive grades have been quickly depleted over the past seven years of safeguards.

According to the World Steel Association, the automotive sector accounts for 12% of global steel consumption and each vehicle typically uses an average of 900 kg of steel. The main steel products used in the automotive sector are coils.

According to data from the European Commission, the current quota on Chinese hot-dipped galvanized (HDG) steel, has been exhausted under category 4B, since the new quarterly safeguard period began Oct. 1.

Other country-specific quotas have struggled to fill as quickly. For example, imports for South Korea still have 80.09% of the quota remaining, with India at 97.95% and the UK at 97.30%.

This comes as European importers have adopted a wait-and-see approach in a time of regulatory headwind, making domestic supply more attractive for purchases.

Domestic HDG prices in Europe have shown resilience as a result, with sell-side sources holding bullish price expectations for the end of the year and onwards.

Platts, part of S&P Global Energy, assessed HDG in Northern Europe Oct. 8 at Eur675/mt ex-works Ruhr, and in Southern Europe at Eur660/mt ex-works Italy, both stable week over week.

According to the Annex EC proposal seen by S&P Global Energy 4B metallic coated sheets under the CN Codes: 7210 20 00, 7210 30 00, 7210 90 80, 7212 20 00, 7212 50 30, 7212 50 40, 7212 50 90, 7225 91 00, 7226 99 10 are expected to have allocated quotas to 1.238.995 with a 50% out of the quota duty level.

Interesting is noticing that ACEA said that additionally, the Commission must recognize the complexities involved in implementing the "melt and pour" rule of origin within the intricate global supply chains of the automotive industry.

"European steel is undergoing a decarbonization transformation and we recognize in that sector many of the challenges that we have in making our industry competitive during radical change", said ACEA Director General, Sigrid de Vries. "We do not contest the need for some level of protection for a commodity industry like steel but we feel that the parameters as proposed by the Commission go too far in ring-fencing the European market. We need to find a better balance between the needs of European producers and users of steel in this measure."

The EC presented its proposal to protect the EU steel industry from the unfair impact of global overcapacity on Oct 7.

Platts assessed imported HRC in Northern Europe Oct. 8 at Eur490/mt CIF Antwerp and in Southern Europe at Eur485/mt CIF South Europe, both stable day over day.

Platts assessed imported CRC in Northern Europe Oct. 8 at Eur610/mt CIF Antwerp, stable day over day. In Southern Europe, imported CRC was assessed Sept. 1 at Eur600/mt CIF, stable month over month.