Steel dispute continues, EU-US steel club fails for now
Steel dispute continues, EU-US steel club fails for now

23 October 2023 – European Union and US government fail to reach agreement in the ongoing steel dispute. European Commission came to negotiations empty-handed. Is Brussels acting too slowly for Washington? And rising steel production in India and China is driving up prices for Metallurgical Coke and Non Coking Coal.

Metallurgical Coke prices up sharply in India and China

An upward trend in metallurgical coke prices in India and China has been observed for several months now. But South African prices for non coking coal for power generation have also climbed sharply since June.

Steel production picks up

According to analysts, this is due to the rising production of steel in the world’s two largest countries. For India in particular, the worldsteel association recently predicted a significant increase in demand for steel products for the coming months and for 2024.

Steel dispute continues, EU-US steel club is cancelled for the time being

On Thursday last week it was already clear that the Global Arrangement on Sustainable Steel and Aluminium (GSA) between the United States and the European Union would be a long time coming. On Friday, it was officially confirmed that an agreement on the steel dispute and a possible climate club had been postponed for the time being. Whether the two months, as stated in the joint statement, will be enough is doubtful. The two years before had already not been enough to come to a substantial agreement.

Excerpt from the U.S.-EU Summit Joint Statement

On 31 October 2021, we announced that we would negotiate within two years an arrangement-known as the Global Arrangement on Sustainable Steel and Aluminum (Global Arrangement) – to address non-market excess capacity and emissions intensity of the steel and aluminum industries, including to foster undistorted transatlantic trade. Throughout these two years, we have made substantial progress to identify the sources of non-market excess capacity. We have also achieved a better understanding of the tools to address the emissions intensity of the steel and aluminium industries. We look forward to continuing to make progress on these important objectives in the next two months.

Source : U.S.-EU Summit Joint Statement

Different views in Washington and Brussels

According to recent reports, the views in Washington and Brussels on measures against China are drifting far apart. There seems to be agreement that China is the largest source of excess capacity in global steel production (closely followed by Europe, but that’s just a side note). However, the European Commission would have to initiate several anti-subsidy proceedings against China before it could possibly take action here. With more than 25 steel categories (see EU Safeguard), this would completely overburden the European Commission, which already works with a hot needle on steel and has its regulations written by the steel lobby. Or it would simply not be in the interests of the financiers.

Steel dispute: EC too slow for US government

However, this is not fast enough for the US side to solve the steel dispute. They want to see immediate action against China and have no interest in the EC taking years to implement with an uncertain outcome. And as expected, this is where worlds collide. The bureaucrats in Brussels know very well that the anti-dumping and anti-subsidy procedures and measures supported by the justified criticism from the member states would blow up in their faces before the European Court of Justice. This does not even take into account all the complaints at the World Trade Organisation (WTO), which would scratch the European Union’s moral image as a clean-cut business.

Hurdles could be insurmountable

For EU steel producers in particular, a lot hangs on a possible agreement. After all, it gives them important quotas within the Section 232 tariffs. But the steel dispute on both sides of the Atlantic continues to face major hurdles, navigating a complex and unfinished mess. And while the bureaucrats in Brussels need not fear re-election, it is a very different story in Washington.

And this shows once again what happens when you fight on the wrong fronts and are constantly led around the ring by lobbyists.

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