13 March 2025 – Yesterday, the European Commission announced the preliminary results of the ongoing review of the EU Safeguard Measure on certain steel products. In many cases, EUROFER’s extreme demands could not be realised. And could the decline in German crude steel production in January 2025 have been highly profitable for domestic steel mills?
EC announces preliminary Safeguard Review results
Even though the results of the current review of the EU Safeguard Measure on certain steel products have not yet been officially announced and still have to be confirmed by the EU member states, the Commission has already sent a preliminary notification to the World Trade Organisation (WTO) and also to the parties involved in the proceedings.
A leaked draft of the results had already emerged shortly beforehand, which had already provided some insights into the results.
Summarised: EU steel lobby can only partially succeed
In summary, it can currently be said that the extreme demands of the European steel mills and their lobby organisation EUROFER have been significantly softened by the Commission. EUROFER’s goal of increasing the safeguard tariffs from the current 25% to more than 35% can also be considered a failure.
In addition, the Commission has exempted some product categories from the sometimes extensive changes to the safeguard measure.
Some of the expected changes are
- Liberalisation rate reduction from 1% to 0.1%
- Changes for developing countries
- Changes to access to residual Tariff Rate Quotas
- Sanction volumes & caps on residual Tariff Rate Quotas
- Carry-over elimination for certain product categories
Stainless steel flat rolled is not subject to the stricter measures
The stainless steel flat rolled sector in particular (product categories 8, 9, 10), where domestic market participants have tried to fuel uncertainty in the market in recent months with fears of a huge tightening of the measures, does not appear to be subject to any tightening measures as things stand at present. The product categories (14, 22) for stainless steel long products such as bars and tubes are likely to be subject to stricter requirements when imported into the EU.
Are horror stories from the German steel association highly profitable?
The German steel association ‘Wirtschaftsvereinigung Stahl’ reported a significant drop in crude steel production for January 2025 compared to the same month last year and attributed this to a lack of economic stimulus from politicians.
Profitable strategy: strategic production adjustment on high CO2 prices
However, it only becomes apparent at second glance that this quantitative adjustment could also have been a highly profitable strategy on the part of German steel manufacturers. A look at the prices for European CO2 emission allowances in January 2025 shows that they had risen to more than EUR 84 per tonne by the end of the month, making them over 23% more expensive than at the same time last year (approx. EUR 65/tCO2).
Order book shaping on a grand scale?
Crude steel production in Germany is therefore more likely to have fallen for monetary and strategic reasons. Order book shaping is a widespread method used by steel manufacturers to adjust their order books and can also be used to achieve political goals.
Do EU steel mills prefer to trade CO2 certificates?
In the record year 2023, EU steel mills were able to generate more than 3 billion euros in revenue from surplus CO2 allowances from emissions trading alone. At that time, the average EU ETS price was around 84 euros per tonne of CO2, making it much more attractive for steel mills to produce less steel and trade in allowances instead.
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