EU steel industry hit by import crisis in the wake of Corona
by David Fleschen
The steel industry in Germany has been hit hard by a dramatic slump in demand as a result of the industrial "shutdown" in the wake of the corona pandemic. At the same time, the foreign trade environment is coming to a head as overcapacities from other countries threaten to increasingly penetrate the European market. This poses an existential challenge for the industry. "It is urgently necessary to prevent the corona crisis from further aggravating the distortions in the market for steel in international trade. The EU Commission must act now to ensure that Europe as a steel location and the associated value chains do not suffer permanent damage", explains Hans Jürgen Kerkhoff, President of the German Steel Federation.
In other steel-producing countries such as China or Russia, huge steel stocks have been built up because the manufacturers have not adapted their production to the changed demand situation but rather expanded it. When the economy picks up again, these quantities threaten to push directly or indirectly into the European market. In a joint statement, IG Metall and WV Stahl therefore call for comprehensive adjustments to the EU Safeguards. "With the EU Safeguards, a suitable instrument is available to protect against an import crisis. The review of the safeguard measures already initiated before the Corona crisis must now be used consistently for adjustments which take into account the dramatically changed situation on the markets", Kerkhoff continued.
The EU Safeguards in the form of so-called tariff quotas were introduced in 2018 to protect the steel industry in Europe from the effects of massive trade diversion due to growing global overcapacities as well as U.S. protectionism. In order to prevent the European market from being flooded by steel imports in the further course of the Corona crisis, the Association proposes, in line with the possibilities offered by the law of the World Trade Organization (WTO), to significantly reduce the tariff quotas and to manage them in such a way that speculation-induced increases in imports are prevented. "Our proposals to adjust the EU Safeguards are necessary in view of the dramatic development in order to ensure the survival of the steel industry in Europe. It must be prevented that a central part of the industrial value-added chain breaks away during the crisis period," said the association's president.
Source: WV Stahl, Photo: Fotolia