The European Automobile Manufacturers’ Association (ACEA) is extremely disappointed by the decision of EU member states to support the European Commission’s proposal to adopt definitive measures that will continue to restrict imports of steel into the EU. These measures do not take into account the needs of downstream users of steel, such as the automotive sector.
Automobile manufacturers source almost all of their steel (approximately 94%) in the European Union. ACEA members are therefore most concerned about the impact that the extension of the safeguard measures, until at least July 2021, will have on access to European steel and the inflationary effect it will have on European market prices. The cost of automotive grades of steel has been consistently high for several years and delivery lead times have lengthened considerably. Meanwhile, through consolidation in the European steel industry, the pool of EU producers is getting smaller and the scarce capacity for automotive steel is getting ever tighter.
Today, the 28 member states have backed the Commission’s proposal to apply a 25% duty on imports above certain thresholds, based on average imports over the last three years. The Commission considers that part of its proposal is automotive-specific as it grants a separate quota to some steel products which are used substantially (but not exclusively) in the automotive sector.
However, the fact that other sectors will be competing for this quota will reduce its usefulness to automobile manufacturers. Ultimately this specific quota does not address the sector’s two key concerns: the inflationary effect that this safeguard will have on EU steel prices and the scarce capacity of EU producers to fulfil orders today.
The latest official data for 2018, provided by the United States Department of Commerce, reports a relatively small decrease of about -10% in imports of steel into the US. This is due mainly to the very high price of steel in the US which regularly exceeds world market prices by more than 30%. Therefore, there is only a limited possibility of trade diversion to the EU – certainly well below any level that could cause ‘serious injury’ to EU steel producers.
“These protective measures pose a real risk to the competitiveness of European auto manufacturers,” stated ACEA Secretary General Erik Jonnaert. “This also comes at a time when our industry already has to contend with major trade-related challenges: the threat of tariffs on imports of vehicles and parts to the US, the decline in the Chinese market, not to mention the prospect of a no-deal Brexit.”
SOURCE: ACEA
