EC proposes to slash tariff-free steel import quota by 47% from 2024 levels

The European Commission plans to reduce tariff-free steel imports by 47% from 2024 quota levels, in a move aimed at protecting the bloc's struggling steel industry from the impact of global steel overcapacity.

The EC will limit tariff-free import volumes to 18.3 million metric tons/year and double the level of tariffs on volumes that exceed the quota limit to 50%, the Commission said in a statement Oct. 7.

The Commission proposal to address the unfair trade impacts of global steel overcapacity was made at a meeting by Stephane Sejourne, EC Executive Vice-President for Prosperity and Industrial Strategy, and confirms a report by Platts Oct.1.

To prevent circumvention of these rules, the EC said it will also strengthen traceability in steel markets by introducing a "Melt and Pour" requirement.

The new proposal is to replace the current safeguard measures, which expire in June 2026. World Trade Organization rules prevent extending these measures.

The proposal will now be subject to the usual legislative procedure, and will require agreement from the European Parliament and the Council on the final regulation. As a result, it is still not clear when the regulation will come into effect.

As per an EC document seen by S&P Global Energy, the quota import volume of 18.3 million mt has been calculated applying the EU's import market share in 2013, and steel consumption in 2024.

The EC said its latest proposal is fully WTO-compliant.

Global problem

"Steel overcapacity is a global problem that requires strong, genuine and joint action by all partners. The Commission will continue leading international work on finding collective solutions to effectively tackle the root causes of global overcapacity, including in the framework of the Global Forum on Steel Excess Capacity," the EC statement said.

"With its proposed measure, the Commission invites like-minded countries to work together with a view to ring-fencing their economies from global overcapacity while securing supply chains and increasing mutual market access," it added..

The EC proposal leaves exports from Norway, Iceland, and Liechtenstein out of tariff quotas or duties.

For the UK, the Commission said it would continue to apply the same regime agreed with the UK as far as trade flows from the UK into Northern Ireland are concerned, in full respect of the Windsor Agreement.

Ukraine will also have access to a system of free-of-duty tariff quotas in the quota allocation, taking it into account the situation of "a candidate country facing an exceptional and immediate security situation."

Targeting overcapacity, imports

According to the EC, global steel overcapacity has risen to 620 million mt/year currently and is estimated to reach 721 million mt/year by 2027, which is well above the EU's annual steel consumption.

The EU's steel consumption is expected to decrease 0.2% year over year to 128 million mt by the end of 2025, according to data from steel industry body Eurofer. while the bloc's steel imports have been rising, which has weighed on its domestic steel industry. Imports remained at a historically elevated level in the second quarter of 2025, accounting for a 25% share of the EU's apparent steel consumption, according to Eurofer.

The EU steel industry has meanwhile lost 65 million mt/year of capacity since 2007, according to the EC, while utilization rates remain depressed.

In 2024, the bloc's capacity utilization rate was 67%, well below what the EC considers a healthy rate of around 80%.

Moreover, since July, steel prices have been languishing at multi-year lows, impacting margins for domestic steel plants.

Platts assessed hot-rolled coil in Northwest Europe at Eur565/mt ex-works Ruhr Oct. 6, down 14% from the year-to-date high seen in April.

Industry welcomes 'major leap forward'

Following the announcement, Eurofer welcomed the EC's proposed measures.

"We strongly welcome and fully support the Commission's proposal on the new steel trade measure. This is a major leap forward to defend the sector and constitutes clear evidence that the Strategic Dialogue on Steel, initiated by President von der Leyen, is starting to bear fruit," said Eurofer director general Axel Eggert.

Eurofer noted that, in contrast to the US's tariffs of 50% duty on all steel imports, justified on national security grounds under US Section 232, the EU trade measures are fully WTO compliant.

Eurofer highlighted that the EU measure introduces a Tariff Rate Quota (TRQ) system, allowing a fair volume of imports to enter Europe free of tariffs.

"This quota is set in line with 2013 market conditions before the first wave of Chinese steel flooding, at over 18 million mt of tariff-free steel -- an amount almost equivalent to the combined steel production of France, Belgium, and Luxembourg," Eurofer said.

"The ultimate objective of reducing unfair imports flooding the EU market is to allow our steel plants to operate again at a viable utilization rate of 80-85%. Currently, our facilities run at unsustainable utilization levels of around 65%, provoking closures and layoffs," Eggert said.

ArcelorMittal, the largest European steelmaker, also welcomed the EC proposal.

"New tariff quotas, to replace the current safeguard, are vital for the survival of the steel industry in Europe, which is in crisis due to the volume of low-priced imports arriving in the EU coupled with shrinking demand and weak economic conditions," CEO Aditya Mittal said.