Protectionist policies and regulatory uncertainty pose serious challenges to global steel trade, especially for exporters to Europe, Julian Verdun, managing director of Stemcor in Europe, told delegates at the Kallanish Asia Steel Markets conference in Kuala Lumpur last week.
Verdun stated that the introduction of the EU's carbon border regulation mechanism and the evolving tariff quota system create uncertainty for steel exporters. Asian manufacturers, in particular, remain unclear on how quotas are allocated for their countries, while delays in verification procedures complicate compliance efforts. Despite the fact that companies have started to attract inspectors, importers from the EU are likely to remain uncertain about the final costs until next year.
The uncertainty is already affecting trade flows, as steel imports from the EU are expected to decline in the third and fourth quarters, potentially putting financial strain on trading companies operating in the market.
Verden also drew attention to the growing regional price inequality caused by protectionism. Steel prices in the United States remain significantly higher than in Europe, with the price of hot-rolled coils in the United States exceeding $1,200 per ton, compared with about $800 per ton in Europe.
Although tariffs can support domestic prices, European steel producers risk losing their competitiveness in the global market due to higher costs and export restrictions. Tariffs may have a lesser impact on value-added products, although the development of such markets requires additional investments, product adaptations, and new customer relationships.
"Starting from July 1, the total quotas, which are quotas for Europe, will amount to 18 million tons. The problem for countries around the world, especially in Asia, which are traditionally major importers to the EU, is that they don't know what quotas will be for their individual countries," Verdun added.
Looking ahead, Verden warned that the third quarter could be particularly volatile for traders. Supply delays related to geopolitical tensions and disruptions to Gulf trade routes, combined with procurement strategies aimed at securing large quotas before new restrictions take effect, could lead to severe financial pressures. Some trading companies may face unexpectedly high costs and losses during this period, potentially leading to "losses" among market participants.
Virgilio Lozano, XSteel's trade director, meanwhile told delegates that the protectionist
