Joint Statement on the EU Steel Safeguard Investigation

The European steel industry is a key business partner in all our sectors. It is vital for us that the steel industry does well to maintain stability in our supply chains.

This coalition of downstream users of steel – including the automotive, technology industries, electricity transmission and distribution equipment, construction equipment, wind energy, agriculture machinery, home appliance, and packaging sectors – express their continued concern regarding the steel safeguard investigation launched in March and the subsequent provisional measures adopted in July.

The European steel industry is a key business partner in all our sectors. It is vital for us that the steel industry does well to maintain stability in our supply chains.

EU manufacturers will often prefer to source from a European producer because of a long- standing close relationship between supplier and manufacturer as well as the shorter lead times and competitiveness on price. The prices for steel on non-EU markets is very often closely aligned with EU market prices. In general, the cost of imported steel will exceed the EU price once shipping costs, lead times, possible additional duties such as anti-dumping, inventory cost, etc. are taken into account.

We question the real impact of the US national security measures on steel in causing a significant diversion of trade towards the EU. In recent years the price in the US for steel products has generally been significantly higher than elsewhere in the world, making it an attractive market for exporters. However, the very steep increase in US steel prices since early 2018, and the highly significant price differential between the EU and the US markets, means that it remains more attractive for EU producers to find customers in the US. On average US steel prices are 35.6% higher than in the EU, so producers here can afford to pay the 25% US national security duties while maintaining competitivity in the US market.

The fundamental reality is that US prices across a very wide range of steel products are so significantly higher than in any other region in the world, that steel producers globally can afford to export to the US and still earn a higher margin than selling on their domestic markets. Across a wide range of leading steel products the average difference in price between the US and China was 37.8%, between the US and CIS 32.6% and between the US and the average Asian market price it was 31.2%.1

While imports to the EU have increased for many of the product categories under investigation between 2013 and 2017, it reflects an increase in demand from European manufacturing during the strong European economic recovery, allied to the high capacity

utilisation of European producers in certain cases, that has driven this need for additional imports. Demand for steel products is only expected to grow over the foreseeable future.

In its justification for the steel safeguard measures, the EU considers it sufficient to protect the Unions’ steel-user industries by defining import quotas based on traditional trade flows, without considering increasing demand in key sectors. Import quotas and additional tariffs will limit growth rates and future investment in those sectors.

Moreover, European steel producers have reported very high profitability for 2017 and throughout the course of 2018. Over the last two years several steel producers have reported multiple successive quarters of their highest earnings in a decade. The continued consolidation in the European steel sector will further restrict competition in the European steel market.

In our opinion, in its analysis leading to the provisional safeguard measures, the European Commission failed to establish the existence of serious injury based on a steep, sudden or sharp increase of imports or the threat of serious injury.

Our industries strongly support the statements of the EU in favour of the multilateral trading system at this turbulent time. We also feel it is important that the Commission scrupulously applies the required legal thresholds of the WTO Agreement on Safeguards when considering any measures on steel. It is clear, based on the request for consultations already submitted at the WTO on the preliminary measures2, that many countries are observing closely how the EU will conclude its investigation.

We once again urge the European Commission to take into account the interest of the downstream steel users when it makes a decision on definitive measures. The current union interest analysis insufficiently addresses the economic impact for many end-user industries. Together, the associations represented here, employ approximately 20 million people in Europe. The competitiveness of European manufacturing needs to be preserved.

All European businesses deserve the right to be protected from unfair competition. We do not believe that a safeguard measure is the appropriate tool with which to do this and strongly query the basis on which preliminary measures have been taken. We remain hopeful that the decision on definitive measures can bring a different result.

Here you can download the pdf.