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EU Safeguard Review 2022 already decided?
EU Safeguard Review 2022 already decided?

25 April 2022 – Certain rumours of an possible end to the EU Safeguard measure on certain steel products appear to have been laid to rest with the recent decision to give South Africa its own tariff rate quota. US HRC prices have risen by 50% since the beginning of the year, as the United States has lost its most important pig iron suppliers with Ukraine and Russia. And China lockdowns show once again how important it is to build viable alternatives in procurement.

EU Safeguard Review already decided?

With the decision of the European Commission (EC) published last Friday to integrate South Africa with its own TRQ into the Safeguard measure, the certain rumours about a possible end to the European market protection measure have probably come to an end.

Safeguard already massively restructured

Together with the restructuring of the tariff rate quotas following the EU sanctions against Russian steel imports, the EC has taken all the necessary measures to be able to maintain Safeguard both argumentatively and legally.

This should mean that everything has been decided for the time being in the currently ongoing Safeguard Review.

US steel prices have risen sharply since the beginning of the year

With the outbreak of the Ukraine-Russia conflict, the United States has lost its two most important pig iron sources. This has led to a sharp increase in US prices for pig iron (+91%) and scrap (busheling scrap +53%, shredded scrap +30%) since February 2022. Nickel, which is so important for stainless steel production, has also increased in price by 57% since the beginning of the year.

US steel industry dependent on pig iron

Since the US steel industry uses 70% Electric Arc Furnaces (EAF) for steel production, it is heavily dependent on pig iron and scrap. This is clearly reflected in the US HRC price, which has risen by 50% since the beginning of the year.

China lockdowns strain supply chains

The ongoing lockdown in Shanghai, China, once again highlights the importance of building viable alternatives in procurement.

Europe and the United States in particular have become heavily dependent on the Asian country in recent years and are now vulnerable to challenges in the supply chains. Not only for electronics, on whose imports the US industry was recently 35% dependent, but also for ferrous and non-ferrous raw materials. Especially also in relation to battery metals.

Freight rates from China to the United States alone have currently almost tripled. It is worth looking beyond China.

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