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Pressure to extend UK steel safeguard mounts
Pressure to extend UK steel safeguard mounts

15 June 2022 – The UK steel safeguard measure must be extended or lifted by the end of June 2022. Therefore, the pressure of the British steel producers on the International Trade Ministry is currently growing. And logistics chains are strained until beyond 2023. Analysts do not see a return to 2019 “pre-pandemic” times. New supply chain strategies are needed. A few of the most important problems and possible solutions.

Pressure to extend UK steel safeguards increases

Not only the steel producers of the EU27 are protected by a Safeguard measure, but also the United Kingdom. The UK steel safeguards are currently under scrutiny. A decision from the International Trade Ministry is expected by 30 June 2022.

British steel producers exert pressure on government

British steel producers are already exerting strong pressure on the decision-making process and want to maintain the UK steel safeguards under any circumstances. They fear that otherwise they could lose sales (£) in the hundreds of millions.

Without steel safeguards at a disadvantage?

At the same time, they also cite the just-reviewed EU Safeguard measure on certain steel products and the US Section 232 Tariffs and that without the UK steel safeguards they would be at a significant disadvantage.

UK steel safeguard very likely to remain in place

We currently expect the UK steel safeguards to remain in place. Especially in view of the fact that the UK and the US have just signed a tariff rate quota deal on steel and aluminium. A similar deal had previously been negotiated by the European Union, which subsequently maintained its own safeguards.

Supply chains also strained beyond 2023?

Not only the transport sector, but also the analysts of the major international banks assume that there will be no return to the pre-pandemic state of the supply chains for the time being.

Supply chains: a return to 2019 is not to be expected

Even though new ships and capacities in the logistics sector are expected to become available in 2023, DHL, for example, assumes that a return to 2019 is not to be expected due to the global situation.

Chinese production and transport unpredictable

Citigroup, among others, sees problems especially with China and its zero-covid policy. Production and transport remain unpredictable for Chinese companies. The best example is Shanghai, which is already partially quarantined again just a few days after the end of the three-month lockdown at the beginning of June 2022.

Sanctions can last for a long time

The challenges related to the war in Europe also pose problems that will last for years. Many sanctions against Russia have been in place since 2014, more than 8 years. An unprecedented number of new sanctions have been added since the outbreak of the war – so an end to the commodity dilemma here is not expected in the near future.

Future supply chain management strategies

Given the vulnerabilities in supply chains exposed by the pandemic, many companies have already had to learn lessons and adapt their operations.

This is not always easy, as orders can often no longer be reliably placed in China, which is increasingly becoming a thorn in the side of Western countries in particular, and Russia is now also out of the picture.

A few strategies that have already proven successful

Problem 1: Focus on a single country of origin no longer possible

Solution: Companies should enter into close partnerships with adaptable suppliers who react flexibly to events and are not tied to one country of origin.

Problem 2: Important components and raw materials are missing

Solution: A change in procurement policy from just-in-time (JIT) to larger inventories and more predictable delivery quantities. Especially with regard to core products and critical components.

Problem 3: Supply chains are too complex for most companies

Solution: Companies need to simplify their supply chains. Many complex procurement tasks unnecessarily cost their own employees time elsewhere. In addition, extensive know-how must be kept on hand, which has to be renewed or adapted almost daily due to constantly changing market conditions.

By choosing the right partner, a lot of time and money can be saved here and one’s own supply chains can be significantly simplified.

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