New, tougher trade defense measures in Europe are increasing the risk that importers of stainless steel long products will face duties on volumes exceeding tariff-rate quotas. However, purchases of some products are likely to continue.
After tariff-rate quotas in the EU and UK were significantly reduced from July 1, several were substantially exceeded early in the October–December quota period. With duties on above-quota imports doubled to 50%, some buyers will face significant bills.
The EU’s 2,399-tonne “overfill” quota for stainless steel bars and light sections has been fully used. It is intended for countries that have their own quota and a free trade agreement with the European Union. By the end of the initial quota lock-in period on October 15, the overrun stood at 14,858 tonnes. Before that, India’s 23,139-tonne quota had been fully used in the first days of the new period. The 1,530-tonne quota for “other countries” in the same product category was also quickly exhausted.
MEPS survey participants report that the effective duty rate on imports of stainless steel bars from India is 18–22%. This is because duty-free shipments are counted together with products subject to the 50% out-of-quota duty. The final rate depends on how much quota is available to the importer. Nevertheless, the additional costs are unlikely to deter buyers: even after duties, CBAM charges and higher freight costs are factored in, Indian producers are offering products for 300–400 euros per tonne less than European suppliers.
Above-quota duties hit tubes
Several EU tariff-rate quotas for stainless steel seamless tubes were exhausted or exceeded in October. By October 15, the “overfill” quota for countries with their own quotas and a free trade agreement with the European Union had been exceeded by more than 750 tonnes. India’s 3,832-tonne quota and the 774-tonne quota for “other countries” were fully used. Duty-free volumes remained available under the quotas for China, Japan and South Korea.
The UK’s new quota regime has also restricted duty-free imports of some products. As of October 15, almost 78% of the 4,135-tonne quota for stainless steel bars and light sections from the EU remained unused. However, the small residual quotas for countries without their own quotas—590 tonnes for bars and light sections and 59 tonnes for stainless steel wire rod—were fully used.
In addition, by October 15, Turkey had fully used its fourth-quarter quota of 3,629 tonnes for other welded tubes. The residual quota for this product had been used up to 96%. Under the UK’s new trade defense regime, products made from carbon and stainless steel are grouped in this category. As a result, some MEPS survey participants in the UK said access to duty-free imports of stainless steel tubes had become restricted.
European importers hope for a straightforward UK CBAM rollout
The introduction of the UK Carbon Border Adjustment Mechanism (CBAM) on January 1, 2027, will increase the administrative burden on stainless steel importers. However, initial estimates indicate that the first charges will be lower than payments by importers in the EU under a similar system.
In the UK, CBAM charges are calculated using product-specific emissions figures and a quarterly carbon rate. The rate is determined by the average price at auctions under the UK Emissions Trading Scheme (ETS), adjusted for free emissions allowances. This month, HM Revenue & Customs published an indicative CBAM rate of £9.69 per tonne of CO₂ equivalent (tCO₂e). The calculation is based on the third-quarter ETS average price of £58.15 per tCO₂e.
Although the calculations are relatively straightforward compared with the EU system, default emissions values for tariff codes covering imports of cold-rolled stainless steel flat products into the UK range from 5.347 to 6.746 tCO₂e per tonne. As a result, the potential CBAM charge is £51.81–65.36 per tonne, before any discounts for carbon charges paid abroad. For stainless steel bars, wire rod and sections, the range is £47.24–65.04 per tonne.
In an October survey, MEPS participants in the EU and UK expressed hope that differences between the two markets’ CBAM systems would not complicate stainless steel trade in the new year. The European Commission and the UK government aim to conclude negotiations on linking their emissions trading systems by November 20. An agreement could remove CBAM charges on bilateral steel trade. However, it is not yet clear when the charges might be removed: the agreement would still need to be formally approved and implemented.
