EU's Steel Predicament: A Crucible of Global Trade Tensions

Dr Gozzi
Dr GozziImage Source: Duferco

Synopsis:

Federacciai’s president criticizes EU for overlooking US openings and urges centering European policies on steel. The European steel sector grapples with global oversupply challenges, the US negotiation dilemma, and lacks alignment with climate principles, endangering its existence.

Article:

Federacciai's president, Dr. Gozzi, underscores the precarious situation faced by European steel companies amidst global challenges. He points to China, the Middle East, and Africa's production surplus due to lenient environmental regulations and low costs, coupled with the United States' unresponsive negotiations. The impact extends across industries, from construction to automotive and white goods.

The EU's failure to seize President Biden's significant trade overture, abolishing Trump's tariffs for discussions on a protected trade zone, left the European steel sector vulnerable. However, EU's adherence to free trade principles conflicted with the US condition of border protection with a 25% duty on non-compliant imports, impeding alignment between the regions.

The clash between Ursula von der Leyen's Green New Deal's 2050 zero-impact climate principles and European steel’s reality highlights the lack of cost-benefit analysis. Dr. Gozzi emphasizes the exorbitant costs of decarbonization and challenges the EU’s lack of support or clear regulatory framework, leading to potential market inundation by Chinese production.

The Carbon Border Adjustment Mechanism (CBAM), devised to tax non-green steel, presents complexities and repercussions. The removal of free CO₂ certificates by the EU Commissioner resulted in steep competitive disadvantages for coal-produced steel, notably impacting facilities like Ilva.

The EU's stringent environmental rules without safeguarding industrial supply chains expose Europe to deindustrialization risks, impacting employment and GDP. Germany's complexities, reflecting on trade relations due to automotive dependency on China, further complicates the situation.

While the EU refrained from sanctioning Russian semi-finished steel imports in select countries, it risks fostering a model wherein branches of unlimited Russian companies might exploit lax environmental regulations, impacting European markets. The reluctance of investors like ArcelorMittal to invest in European production adds to the concerns.

To address challenges faced by Italian steel industries, collaborations between public and private sectors are advocated. Adaptation to electric ovens powered by DRI and the flexibility of future EU rules post-June elections are proposed remedies.

Concerns arise from Ukraine's Metinvest investment in Piombino, amplifying fears of raw material scarcity for Italian EAF steel industries due to increased scrap demand. The EU's inaction towards diverting scrap exports to countries like Turkey, engaging in environmental dumping, exacerbates the situation.

Dr. Gozzi advocates for industry-centric policies in Europe, aiming to place industry concerns at the forefront of European policies.

Conclusion:

The European steel industry faces an existential crossroads. The need for cohesive EU policies, aligning environmental goals with industry viability, and safeguarding against external threats is paramount to prevent deindustrialization and foster a sustainable steel future.

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