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| EU Steel Import Quotas |
The European Commission’s proposal to reduce EU steel import quotas by 8.5 million tonnes marks a major shift in trade dynamics. Hot-rolled coil (HRC), cold-rolled coil, and hot-dip galvanised products will all face tighter restrictions. Any imports exceeding the quotas will incur a 50% tariff, affecting all countries, including Ukraine.
Scope and Impact of New Quota Mechanism
The new system caps HRC imports at 5.2 million tonnes—down 3.6 million tonnes from 2024 levels. Cold-rolled coil quotas will fall to 1.5 million tonnes, while hot-dip galvanised products will be limited to 2.85 million tonnes. These quotas will apply quarterly, with no rollover of unused volumes. The EU steel import quotas policy includes a "melt-and-pour" clause for origin tracking but will initially serve as a reporting tool.
In contrast, the European Commission emphasized fairness for candidate countries facing exceptional security issues, citing Ukraine. However, it maintained that such considerations must not undermine the policy’s effectiveness. Country-specific allocations will be detailed in future legal instruments, partially in coordination with WTO members.
Industry Reaction and Market Implications
EU steel producers welcomed the change. Eurofer described it as a "long-awaited proposal" that will restore competitiveness. The Commission aims to increase EU mill capacity utilization from 67% to 80%. Meanwhile, UK Steel urged the UK government to negotiate preferential terms and adopt similar quota tightening.
As a result, CME HRC futures prices surged. February contracts rose to €640/t, with January close behind at €630/t. While the new EU steel import quotas are still at the proposal stage, markets have already begun to price in the expected supply constraints.
ScrapInsight Commentary
The proposed EU import quota cuts signal a shift toward stronger domestic steel protection. If enacted, the measures may tighten scrap availability and boost European melt rates. Traders should watch for ripple effects in raw material flows, especially for HRC and galvanized scrap grades.
