European Union (EU) has begun a review of its safeguard measures on steel imports, a move that could significantly impact Indian steel exporters. Currently, the EU uses an import quota system for certain steel products, which allows them to enter the region at zero or lower tariffs up to a specified limit. Once this quota is exceeded, a 25% tariff is imposed on steel products. For India, steel exports to the EU account for a significant portion of its total exports, ranging from 15% to 40%.
This review could lead to a reduction in the tariff-free quota, potentially hurting Indian exporters, especially those focusing on key markets like Italy and Belgium, which received 22.3% and 11.2% of India’s finished steel exports in FY24. The review of safeguard measures stems from a slowdown in steel demand within the EU and a surge in steel exports from China, which has flooded global markets, including the EU. China’s steel exports have reached record highs, primarily due to weak domestic demand driven by a faltering real estate sector. Experts predict that China’s steel exports in 2024 could exceed the previous record of 112 million tonnes set in 2015. This influx of Chinese steel has resulted in a greater supply of steel in the EU market, raising concerns about the impact on the region’s domestic industry. Consequently, the EU is considering tightening its safeguard measures, which would likely reduce the volume of steel entering without tariffs.
Indian steel exporters, particularly those in sectors like automotive and construction, are concerned about the potential effects of these changes. EU steel prices are typically higher than in other markets, making the region an attractive destination for Indian producers. However, if the safeguard quotas are reduced, it could disrupt the export dynamics and lead to higher costs for Indian steel companies looking to maintain their foothold in the EU. With the EU being one of the major export destinations for Indian steel, any shift in import policies will have a direct impact on India’s steel sector, especially as it navigates the ongoing global supply chain disruptions and fluctuating demand for steel worldwide.
