EU Steel Safeguard Review 2023 launched
EU Steel Safeguard Review 2023 launched

5 December 2022 – Last Friday, the EC launched the already announced Safeguard Review for 2023. Has the end of Safeguard now come? The prices for important stainless steel raw materials have risen significantly again in the past week. Especially for nickel, ferro-molybdenum and scrap prices have gone up considerably.

EU Steel Safeguard Review 2023 launched

On 2 December, the European Commission (EC) officially launched the already announced Safeguard Review for 2023. As determined in 2021, the review will focus on whether the market protection measure on certain steel products should remain in place until 2024. This means that two safeguard proceedings are currently running at the same time, as the EC must also adjust the justification for the introduction of the safeguard measure in 2019 following the ruling of the Dispute Settlement Body (DSB) of the World Trade Organisation (WTO).

End of EU Safeguard measure coming?

The end of the EU Safeguard measure has already been invoked several times in the past and then emphatically shot down by the EC. Just look at the serious calculation error of the Commission, which was used as the main argument for the extension in the 2021 explanatory memorandum. And subsequently had to be quickly and surreptitiously removed and replaced by a significantly watered-down justification.

More problems since 2019?

The possible reasons for the EC to maintain the Safeguard measure have not diminished since 2019 and have, if anything, increased in scope. The looming dispute between the European Union and the United States over President Joe Biden’s Inflation Reduction Act, the conflicts in the EU-US Trade and Technology Council and the continuing Trump-era Section 232 Tariffs that had led to the introduction of Safeguard in the first place. Currently, the EC still has to improve the justification for the introduction of the measure and is facing strong demands from Turkey, India and China.

EU energy crisis new main argument?

Add to this the problems of European steel producers in the wake of the energy crisis, which not only led to various plants being shut down in Europe and, for some producers, even to energy cost surcharges of almost $1,000 per tonne in December 2022.

New market protection instruments not yet available

Moreover, the new instruments that are supposed to secure protection and subsidies for the domestic steel industry in the future have not yet been finally ratified. Neither the Carbon Border Tax CBAM nor the allocation of free ETS certificates are in the bag. The new waste shipment regulation (WSR) and the scrap export ban contained therein, which were passed by the ENVI Committee last week, have not yet been finally decided. Not to mention the new market protection instruments that the EU is planning in order to be able to react quickly to market changes.

Review probably just a fig leaf again

EUROFER, manufacturers and the EC currently have enough ammunition to get the Safeguard measure extended to 2024. Announcing a review for 2023 was only meant to cool down tempers and to provide less scope for possible legal action before the European Court of Justice or the WTO DSB. So it remains highly unlikely that the EC will announce an end to Safeguard until an effective alternative to the steel industry’s main market protection measure has been implemented in Europe.

Raw material prices are rising

The prices for important stainless steel raw materials such as nickel, scrap and ferro-molybdenum continued to rise significantly last week. Nickel was up more than 6% week-on-week, scrap was up more than 11%, and ferro-molybdenum, which is so important for grade 316/316L stainless steel, was up almost 10%.

Nickel over $ 30,000 per tonne

In trading on the SHFE, nickel is currently above $ 30,000 per tonne, and on the LME it had already cracked $ 29,000 per tonne shortly after the start of trading.

Stainless steel prices continue to rise

The rising ferro-molybdenum price, the strong nickel and the rising scrap prices should therefore also cause stainless steel prices to rise further. This can already be seen in the Chinese spot market and also in the stainless steel futures.

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