BRUSSELS — The coronavirus crisis could lead to massive stockpiling of steel that could then flood the European Union when demand returns, the EU trade chief said on Tuesday, adding this was something the bloc would seek to guard against.
Quotas for 26 grades of steel, including stainless, were set at the average of imports in 2015-2017 plus 5%, with a 3% hike last year. Imports beyond the quotas are subject to a 25% duty.
EU Trade Commissioner Phil Hogan said on Tuesday that the adjustment for this year would take place by July 1 as planned. Initially, the Commission had envisaged a further 5% increase in the quotas, albeit subject to a review.
Lots of lawmakers and EU countries had expressed concerns about possible stockpiling of steel, particularly by China, and what would happen to these stocks when the restrictions were eased, Hogan said.
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“We are looking at the review of the steel safeguards in this context,” he told members of the European Parliament in a video session.
Third country exporters could seriously disrupt the EU market, he said, depending on their behavior when demand in the 27-nation bloc revived.
“Certain third country exporters may well decide to sell their product at below cost or at all cost or at any cost, with a view to gaining larger stakes in a smaller EU market,” he said.
EU steel production is already down by about 50% and new orders have fallen by 70-75%, with further production cuts planned as demand continues to fall given a near complete shutdown of the auto sector and a significant decline in construction, EU industry body Eurofer said.
Eurofer said it was already seeing extremely low prices on offer from third country exporters for certain steel grades.