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UK 'shortly' to publish final decision on UK steel safeguard regime from July 1

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Current safeguards regime to expire June 30

Industry divided on merits of safeguards continuation

Row linked to resignation of prime minister's adviser

A decision on how -- and if -- the UK's steel import safeguards regime will continue from July 1 will be announced "shortly", a spokesperson from the department of trade said over the weekend, without specifying an exact date.

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"In September 2021, the Trade Remedies Authority (TRA) began a reconsideration of its recommendation last year on the UK's steel safeguard after applications from stakeholders," the spokesperson said in a June 18 email to S&P Global Commodity Insights. "A final decision on the steel safeguard will be published shortly."

The last-minute nature of the government's announcement increases speculation about the safeguards scheme's future due to recent market changes. Steelmakers' association UK Steel supports continuation of import controls in their entirety while domestic steelmakers spend funds on decarbonization strategies.

According to UK Steel Director General Gareth Stace, weakening the controls could bring damages of GBP150 million ($184 million) to the UK steel industry amid continuing global market distortions.

"Crucially, the EU has just reconfirmed its own steel safeguards until June 2024 and a WTO ruling found the measures to be compliant with the rules," he said in a statement.

A tightness in some products, and soaring energy costs, led to abrupt price increases in many steel products throughout Europe in the weeks following Russia's Feb. 24 invasion of Ukraine. Prices have more recently fallen worldwide due to a tail-off in demand amid recent COVID-19 shutdowns in China, supply chain problems and recessionary fears.

Asian hot-rolled coil prices fell sharply June 20 tracking the Chinese futures on bearish demand fundamentals.

Platts assessed SS400 HRC 3 mm thick at $677/mt FOB China, down $45/mt from June 17, according to S&P Global Commodity Insights data.

European steel consumers represented by the Euranimi association meanwhile consider the safeguards' validity to have been eroded after the US recently struck steel trade liberalization accords with both the EU and UK, replacing the US' previous Section 232 import tariffs on EU and UK steel with a tariff-free quota system.

UK industry is partly dependent on imported steel, as it produces only around 70% of its annual requirement of some 10.2 million mt crude steel, according to UK Steel.

The current UK safeguards system, due to expire June 30, has been under review since late 2021. The system mirrors the EU safeguards system, put in place in mid-2018 in response to the US' imposition of Section 232 import tariffs of 25% on steel imports in March that year.

Row impacted PM's ethics adviser

Behind the scenes, a row has been going on for months between the TRA, set up to handle trade affairs after the UK left the EU, and which has displayed pro-free market principles, and the UK government displaying more protectionist tendencies as it comes to terms with the role a healthy domestic steel industry can play in achieving energy transition goals.

In an initial review of the UK steel safeguards regime last year, the TRA recommended liberalization, reducing to 10 from the original 19 the number of categories of steel products subject to import safeguards. The trade department did not approve this recommendation following industry complaints in March "calling in" the review so that further recommendations would be made by the secretary of state for international trade, Anne-Marie Trevelyan, herself and no longer by the more independent TRA.

The government has also played down reports that Lord Geidt resigned last week as Prime Minister Boris Johnson's ethics adviser over matters including the government's apparent intention to tighten up further on steel imports into the UK, including on flat rolled steel from China, even though this could potentially run counter to WTO principles. The government spokesperson declined to comment on this matter at the weekend.

The TRA stated June 16 it had "been made aware" of Lord Geidt's letter of resignation and the prime minister's reply, both referring to TRA-related decisions, which reportedly put Geidt "in an impossible position."

"My intention was to seek your advice on the national interest in protecting a crucial industry, which is protected in other European countries and would suffer material harm if we do not continue to apply such tariffs," Johnson stated in his letter. "This has in the past had cross party support. It would be in line with our domestic law but might be seen to conflict with our obligations under the WTO."

For its part, the TRA stated: "The TRA case to which the letter appears to refer was 'called in' by the Government earlier this year, meaning that the government holds full decision-making authority in relation to the case."

The TRA has carried out further analysis under the government's direction on the safeguards issue and provided a report of findings to the secretary of state for international trade June 1.

"The Report of Findings is an analytical piece of work designed to inform government decision-making and does not contain recommendations from the TRA," it stated.

The UK-based International Steel Trade Association and UK tax authority HMRC have both pointed to the apparent delay in announcing the new safeguards now complicating trade flows.

"You will be aware that the Safeguard Measures applicable from 1st July 2021 were only announced late on the evening before," ISTA Director Hugh Bailey said in a June 17 letter to the trade department. "We trust that more notice will be given this time round. Until then, the whole supply chain -- from overseas mill to trader/service centre/stockholder to end-user -- is in the dark so far as quotas and duties are concerned, which is clearly not a satisfactory situation."

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