“Europe must save its steel”, says Stéphane Séjourné, Executive Vice-President of the European Commission responsible for Industrial Strategy. He said as much when he presented the European Steel and Metals Action Plan on Wednesday 19 March.
This action plan follows the dialogue launched with industry players on 4 March. The proposals revolve around energy prices, the fight against unfair competition, demand and carbon leakage. The announcements were eagerly awaited by the industry, which is suffering from falling demand in Europe, global overcapacity and high energy prices in the EU.
In 2022, these represented up to 80% of steel production costs. The Commission recalls several of the measures already announced in its Action Plan for Affordable Energy (see EUROPE 13588/3) to bring prices down, such as the future delegated act on low-carbon hydrogen or the publication of guidelines on the design of network tariffs, with a view to reducing them for the metals sector.
Unfair competition. The Commission is now tackling Chinese steel overcapacity, initially by adapting its current safeguard measure on steel imports starting the 1st of April. “We are aiming for a reduction of up to 15% in imports”, said Stéphane Séjourné.
Not only are the current tariff quotas considered inadequate, but needs have been exacerbated by the return of US steel tariffs, which will redirect some of the flows to the EU.
In a second phase, the Commission will propose, by the third quarter of 2025 at the latest, a replacement for the safeguard measure which expires in June 2026.
It also wants to look at aluminium, in view of the difficulties recently encountered by European producers. The Commission has begun gathering evidence with a view to initiating a potential safeguard investigation into aluminium.
In addition, an investigation already opened in December 2024 into certain manganese- and silicon-based alloy elements (see EUROPE 13549/26) could lead to an additional safeguard measure around November of this year.
Finally, the Commission is considering amending its rules of origin to prevent circumvention practices. More and more producers are avoiding paying tariffs by making minor modifications in a country not subject to customs duties. The introduction of a rule is envisaged to take into account only the country where the metal was melted when calculating the tariff, and not the country where the transformation took place.
Carbon leakage. Circumventing European rules also concerns the Carbon Border Adjustment Mechanism (CBAM). This targets steel imports, but not finished products containing steel. The Commission has reiterated its intention to extend the scope of CBAM to include certain downstream products.
CBAM also affects the competitiveness of European producers when they export their products to countries that do not apply carbon pricing. While the Commission has so far indicated that it does not have a solution that is compatible with the rules of the World Trade Organization (WTO), it says it is working on the issue to try to find a solution that respects competition rules.
Action on demand. Faced with weak demand for recycled or scrap steel in Europe, the Commission is considering imposing trade restrictions to limit exports of scrap steel, starting this year. “This is a major challenge, because recycling our own steel costs less in energy and makes us more self-sufficient. The scrap must remain in Europe”, said Stéphane Séjourné.
The Commission also wants to adopt recycled content obligations for certain products in the not-too-distant future, i.e. by the end of 2026.
Also in 2026, the Circular Economy Act should strengthen the operation of markets for recycled raw materials and create “a single market for waste”.
The Steel Action Plan has been well received by the sector’s representative in the EU, Eurofer. “Now it’s time to implement meaningful solutions through ambitious measures”, said its Chair, Henrik Adam.
To see the action plan: https://aeur.eu/f/g0m (Original version in French by Léa Marchal)