Europe hit by steel import surge as a result of U.S. tariffs
Steel imports into Europe have risen sharply as a result of U.S. tariffs, particularly from Turkey, threatening European steelmakers as demand growth in the continent slows, European steel association Eurofer said on Wednesday.
Eurofer said in its quarterly review it expected European Union apparent steel consumption, a reflection of supply to the market, would rise by 2.2 percent this year and by 1.1 percent in 2019.
Trade frictions with the United States and cooling global demand had weakened prospects for EU steel users, Eurofer said.
U.S. President Donald Trump imposed import tariffs of 25 percent on steel from most countries from March 23. It added Canada, Mexico and the European Union to the list on June 1 and doubled the rate to 50 percent for Turkey in August.
Karl Tachelet, Eurofer’s trade director, said the U.S. tariffs had led to a surge in U.S. steel prices of some 40 percent, meaning European producers could still sell some steel there.
“The question for us is how long are the U.S. prices going to stay that high. There will be some correction and when prices go down the 25 percent will be more prohibitive,” he continued.
The main impact to date was that steel that might have gone to the United States was being redirected to Europe.
Turkey, facing a 50 percent tariff, could no longer realistically sell across the Atlantic, while slowing domestic growth left it with more steel to sell.
“They are pushing a lot of volumes into the EU market at any cost,” said Jeroen Vermeij, director of economic studies at Eurofer.
Russia, a traditional exporter of steel to Turkey, was likewise, needing an outlet for its production, Eurofer said.
In the third quarter 2018, Eurofer said steel consumption had risen by just 0.6 percent, but imports increased by 10 percent, meaning EU mills were at best only able to deliver the same amount of steel as last year. Imports now make up some 25 percent of the EU market.
Imports from Turkey and Russia increased by most – from Turkey by 57 percent in the first nine months and from Russia by 56 percent.
The European Union did put in place safeguards to limit steel imports in the light of U.S. tariffs
Eurofer said it was broadly content with the system, but the quotas were global and that country-specific quotas should apply to major exporters to help stabilize the market.