Brussels is tightening the screws on steel imports: this is one of the main measures in the Action Plan for Steel and Metals, the sector that underpins European integration. The European Commission plans to limit steel imports by 15% from 1 April. Following the introduction of 25% tariffs by the US, Europe fears an increase in imports, with products previously destined for the United States potentially being redirected to the EU. Hence the reduction in import quotas, to cut incoming flows by 15%. In 2024, the EU imported around 60m tonnes of steel.
“We are giving a strong signal to investors and workers in this sector, for greater predictability,” said the European Commission’s executive vice-president for prosperity and industrial strategy and European Commissioner for industry, Stéphane Séjourné, at the presentation of the Action Plan for Steel and Metals.
The survival of this key EU sector, which accounts for 7% to 8% of global steel production, is also at stake. ‘The plan is being implemented at a time when market-distorting measures, such as non-commercial support for global overcapacity and unjustified tariffs on EU steel and aluminium, can have a negative impact on our economy,” said the European Commission representation in Luxembourg a few days ago.
The Clean Industrial Deal launched in February 2023 was, according to players in the sector, too general and not sufficiently adapted to realities. It lacked targeted measures, particularly on energy prices and protection against social dumping. It is precisely to fill these gaps that the EU commission has launched this specific action plan for steel and metals, which is intended to be “more operational and strategic.”
The sector is suffering from soaring energy costs since Russia’s war in Ukraine and environmental pressure, as the EU wants to achieve carbon neutrality by 2050. In the US, for example, electricity prices are two to three times cheaper than in the EU. For gas, it’s four to five times less.
More steel than we need
Rules penalise the 500 production sites in the EU (around 2.6 million jobs) that contribute around €80bn to the EU’s GDP. In Luxembourg, which remains a historic and strategic player in the sector, there are around 4,300 direct jobs in the steel industry and more than 6,000 if related services are added.
Faced with energy prices, the new plan calls on the member states “to use all room for manoeuvre to reduce the costs borne by energy-intensive industries, in particular by modulating network tariffs or by applying zero-rate taxation to electricity.”
Under pressure, the sector is facing global overcapacity and unfair competition, mainly from China. China is keeping up its production despite stagnant demand, and is exporting at lower prices, putting European producers in difficulty. Global overcapacity means that supply far exceeds global demand, leading to falling prices, fierce competition and the risk of plant closures in the least competitive regions. Europe is flooded with low-cost imports, often not complying with European environmental or social standards.
In steel alone, global overcapacity in 2024 was estimated to be more than four and a half times the EU’s annual consumption. In response to this phenomenon, the action plan aims to adapt the current safeguard measure on steel, which imposes customs duties when the volume of imports exceeds the level of historical trade flows. The commission will also propose by the end of the year a new long-term measure to protect the EU steel sector once the current safeguard measure expires in mid-2026.
Reducing dependence and learning lessons from Russian gas
Europe’s sovereignty is at stake, as is the security of its supply chains, at a time when overcapacity caused by China and other countries circumventing EU trade defence measures and sanctions is a growing threat. Not to mention the lessons to be learned from Russia’s war in Ukraine, which has highlighted the fragility of supply chains and the danger of massive dependence on certain suppliers; particularly with the example of Russian gas.
To reduce dependence on imports, local production must be increased and the need for imports reduced. The European Commission explains in its action plan that “recycling waste generated in the EU also reduces the dependence of EU industry on imported primary raw materials such as bauxite/alumina/aluminium recognised as strategic raw materials for the EU, and where demand is expected to increase significantly.”
Brussels is also considering setting recycled content targets for steel and aluminium in certain key sectors. There is also talk of introducing resilience and sustainability criteria into public procurement and support programmes.
Europe must be a global steel player, not a playground
To encourage local production and filter out disguised imports, the commission will also evaluate the introduction of the “fade-out” rule with the aim of preventing certain players from circumventing trade defence measures. This means that for a metal product to be considered European, it must not only have been processed but also produced in Europe.
The action plan also aims to combat the phenomenon of “carbon leakage”: companies that move their production to where environmental regulations are less strict. The commission therefore wants to adapt its carbon border adjustment mechanism (CBAM), which enables a fair price to be set on the carbon emitted during the production of goods entering the EU. This will include exempting exporters of steel and other metals from the carbon tax to create a more level playing field.
“Europe must be a global steel player, not a playground,” said former French minister and MP Sejourné when presenting the action plan.
Objective defence
Steel and metals are essential to the energy, transport, automotive and construction sectors; they are even more so today in a context of increasing defence capabilities and spending, and to make the /Readiness 2030 plan a reality.
By strengthening local competitiveness and production capacity for steel and metals, the action plan helps to reduce the EU’s dependence on external suppliers, thereby aligning the security and defence objectives of Rearm Europe and Readiness 2030.
“With the Steel and Metals Action Plan presented today, the European Commission is sending a clear message: a strong European Union needs a strong European steel industry. From combating unfair trade to closing the loopholes in the carbon adjustment mechanism at borders, to recognising the strategic and environmental value of steel scrap, the Action Plan identifies areas that are crucial for our sector. It is now time to implement concrete solutions through ambitious measures,” said the president of the European Steel Association (Eurofer), Dr Henrik Adam.
The spokesman for the management board of Thyssenkrupp Steel, the third largest steel producer in the EU, Denis Grimm, welcomed this step forward: “The presentation and explanation of the European Steel Action Plan by executive vice-president Séjourné today in Duisburg is very important for us. It shows that the European Commission is fully aware of the extremely difficult situation in the sector and wants to remedy it with the measures set out in the action plan. It should be clear to everyone that the combination of massive global overcapacity, inadequate trade protection, excessively high energy prices and the challenges of transformation are jeopardising the very substance of our industry. Last year alone, nine million tonnes of capacity were closed in Europe. The steel action plan represents a pioneering step towards the competitiveness and decarbonisation of the European steel industry. Of particular note is the clear priority given to trade protection, which is essential to guarantee the competitiveness of the European steel industry. The important thing now is consistency and speed of implementation. There is no time to lose. We thank the European Commission, which has made steel its main issue.”
This article was originally published in .