End for EU Safeguard: Assofermet calls on EU Commission

The Assofermet association, which represents a large part of Italian steel processors, traders and distributors, has written a letter to the EU Commission demanding that the EU Safeguard measures be ended. Assofermet cites the massive distortions and problems in the European steel and stainless steel market as the reason. The trade protection measures (anti-dumping duties and import protection measures) would have to be ended immediately.

Entire strategic steel sector in the EU threatened by safeguards

Assofermet writes in its press release that it (Assofermet) considers the steel processing sector as strategic for the economy of the entire European Union. The high tariffs threaten the steel sector as a whole. Therefore, the Union must reopen to international markets. Otherwise there is a risk of excessive supply shortages. Steel and stainless steel are already in short supply on the market. Prices are completely distorted. And this is to the detriment of end users and downstream industry in the EU.

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Combined effect of safeguard measures causes price distortions

Assofermet continues to write that it has pointed out from the beginning the price distortion caused by the closure measures. The safeguard measures have reached critical impact on the downstream industry, especially its distributors and end users.

The protectionist excesses caused by the sum of anti-dumping and anti-subsidy duties, as well as the EU Safeguard procedure, have led to excessive protectionism, Assofermet stresses.

This has led to a concentration of bargaining power in the hands of a few large European steel producers. To the great detriment of downstream market participants.

Serious shortage of flat steel in all product areas

As an example, Assofermet cites the fact that the sector has been suffering serious shortages in all flat steel product areas for months. Steel mills in Europe are unable to meet domestic demand. Import flows for steel are largely blocked due to the safeguard measures in force.

Stainless steel coils and sheets also badly affected

The market for stainless steel coils and sheets, for which there are only four European producers, is also severely restricted by the measures. For some product types and dimensions there are even only two producers.

Dramatic shortage of hot-rolled coils

Assofermet further writes that there is a dramatic shortage of material in the hot-rolled coil sector. EU steel producers are unable to meet domestic demand. Many EU producers’ lead times are fully booked and sold out until at least the end of the second quarter of 2021.

Assofermet: “Earthquake” looming on the European steel market

According to ASSOFERMET, the negative consequences of too protectionist policies (albeit delayed after the Covid 19 pandemic crisis) will therefore take full effect from the second half of 2020, causing an “earthquake” on the market.

With a summary, the association points out the main problems:

double-digit price increases, with peaks of 50-60% for some products;
limited availability of goods from European manufacturers and longer lead times;
European prices are much higher than those in Asia, creating a competitive gap between final Community products and those produced outside the Union;
An ever-increasing verticalization of European producers through their distribution centers, with quotas of more than 55% of coverage depending on the market. This results in further penalties for independent distribution centers that are obliged to purchase their supplies from the same producers;
distorting effects on pricing and conditioning free negotiation between the parties. Even contracts already confirmed, countersigned and ready for delivery are called into question. A specific and particularly significant case occurred recently when our Associates received an official communication from the Italian national manufacturer of stainless steel flat products requesting a renegotiation of prices for contracts already signed at the final price. This renegotiation was requested a few days before the month of expected delivery, obviously making it impossible for our associates to look for alternatives and oppose the request.

Distortions in the steel market must be corrected

To correct all these “distortions”, ASSOFERMET has asked the EU Commission, among other things, for an overall review of the situation, with the aim of better and differently balancing the existing trade protection measures. And in particular not to renew the EU import protection measure that expires on June 30, 2021, and to avoid an extension for the near future. In ASSOFERMET’s view, the Union’s measures to protect the basic industry must indeed be balanced by a sufficiently open market for imports. To promote free competition and avoid excessive market concentration.

Assofermet stresses: overall EU interest is not represented by a few steel producers

Finally, the association points out that the overall interest of the Union does not depend on and is represented by the European steel producers alone. But also on the countless companies, distributors and independent service centers that operate in the EU market. And who are the fundamental link in the industrial development of the individual EU member states that supply the end users.

Source: assofermet.it

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End for EU Safeguard: Assofermet calls on EU Commission to end market protection measures