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Steel industry faces crisis as 'safeguards will take too long to arrive'

The steel industry faces being plunged back into crisis as US import tariffs hit and measures to prevent a flood of cheap steel into Europe are too slow to save companies from falling profits.
The warning comes from heavyweight broker UBS in a comprehensive note on the steel sector, which predicts the benchmark price of steel will drop by about $100 (?75) to around $450 per tonne by the end of the year.
“Rising inventories, higher net exports of Chinese steel and higher imports into the EU owing to steel trade frictions with the US and steel price differentials should bring an end to the two-year recovery of EU steel,” said UBS analyst Carsten Riek.
Steelmakers in the UK are only just recovering from the crisis of 2015 when a flood of steel from subsidised Chinese plants, high energy prices and rising labour costs combined to cause thousands of job losses in the sector.
Last week’s introduction of 25pc tariffs on the import of steel into the US is likely to cause steel originally destined for America redirected to Europe, according to UBS.
Steel industry faces crisis as 'safeguards will take too long to arrive'

European steelworkers protest in Brussels in 2016 calling for the sector to be protected from imports

Credit:
 Isopix/REX/Shutterstock
Mr Riek said the EU was likely to be the ultimate destination for this steel because of the “current price differential relative to Asia, the euro’s strength and the EU’s general openness to fair trade”.
Imports of steel into the EU are already up 10pc on the same point last year in the first quarter,  he noted.
Steel industry faces crisis as 'safeguards will take too long to arrive'

Donald Trump says introducing tariffs on the import of steel will protect US jobs

Credit:
Reuters
European Commissioners have launched an investigation into the damage redirected steel flowing into the EU could cause to domestic plants. This damage has to be proven before barriers can be put up to stem imports.
Mr Riek said it was unlikely that the retaliatory measures would come within six months, because the European steel sector is currently enjoying its highest profitability in a decade, making it hard to prove injury.
13 EU countries export over 100k tonnes of steel to the US
Any measures to safeguard the sector will also have to be introduced carefully to “avoid frictions in global trade flows and triggering countermeasures”, he said. These measures could hurt the EU car and machinery sectors, which account for more than a third of European exports.
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