24 August 2022 – The EC announced today that the EU Safeguard measure on certain steel products will be adjusted following a WTO ruling. A look at the possible impact of this adjustment (spoiler: Safeguard will not be terminated). Chinese stainless steel spot market prices rise due to strong demand and reduced production. And US steelmakers see end to price cuts.
EU Safeguard: EC initiates implementation of WTO ruling
The European Commission officially announced on 24 August 2022 that it has initiated a procedure to implement the World Trade Organisation (WTO) Dispute Settlement Body (DSB) ruling on the Safeguard measure on imports of certain steel products into the Union.
The proceeding aims to bring the Safeguard measure in line with the WTO Agreement on Safeguards and the GATT 1994. Turkey had initiated the WTO panel and got justice from the DSB on some points.
Impact on EU Safeguard measure?
It is unlikely that this case will have much impact on the EU Safeguard measure or even lead to its end. Because in the end it will come down to a trade between the European Union and Turkey as to whether the additions and adjustments in the justifications for the introduction will be sufficient.
Prime example Indonensia
Just look at the results of the WTO panels on the Indonesian Safeguard measure on certain iron and steel products from 2018. As soon as complainants and defendants had communicated that everything was now “correct”, the cases (DS490 and DS496) were closed without further questioning on the part of the WTO or the DSB.
India used overburdened Appellate Body
Japan had also been upheld by the DSB in the WTO panel against India’s Safeguard measure. India then used the opportunity to appeal. And since the WTO Appellate Body is grossly overburdened, there has been no progress on this issue since 2018.
What about the United States’ Section 232 measure?
Section 232 has been the subject of several cases since 2018. Due to the complexity of the cases, the WTO panels on this have postponed the dates several times and are now currently at the end of 2022 to submit their reports.
And the European Union?
The EC will of course consult all involved and interested parties on this necessary adaptation of the EU Safeguard measure. And then, as written, apart from a lot of quibbling, there will most likely be a deal in the end with Turkey confirming to the WTO that the Safeguard measure is now in line with the Panel ruling.
Chinese stainless steel producers cut production
It has already become apparent on the Chinese spot markets that large Chinese stainless steel producers are cutting back their production. Prices there have already risen in recent days. According to market participants, the reason for this is that the producers want to influence prices and keep the significantly increased demand warm.
US steel producers: no more major price cuts
First major market participants in the United States officially say that they do not expect any major price cuts. Even with a view to the alloy surcharges for stainless steel, only marginal adjustments are visible here compared to previous months.
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