24 January 2023 – EU and US stainless steel alloy surcharges are rising in February 2023, in some cases by double digits, and are already above the 2022 average. Has the dispute over steel tariffs between the European Union and the United States reached an impasse? And does the Chinese reopening offer a boost for Europe?
Stainless steel alloy surcharges rise sharply
The first publications of European and us stainless steel alloy surcharges confirm where the trend of the last few weeks was already pointing: prices are rising significantly, in some cases by double-digit percentages.
What influences the alloy surcharges?
Higher nickel and scrap prices for grades 304/304L and, in addition, the exorbitant increase in the price of molybdenum for grades 316/316L are raising prices by up to 13% despite a stronger euro. In comparison, the current alloy surcharges are already above the average of 2022.
And this is in the middle of the Lunar New Year celebrations. The price increases from Asia should be expected after that, if they have not already been announced. Good who has already made his purchases now or still has sources that can offer at more favourable conditions.
U.S.-EU Trade and Technology Council at a Dead End?
The U.S.-EU negotiations in the so far only rudimentarily resolved steel and aluminium dispute continue to hang in the balance. No substantial progress seems to have been made in the last round of negotiations on 5 December 2022. At least not with regard to the EU Safeguard measure or the US Section 232 tariffs. This is also shown by the joint statements (EU/US) of both sides. Steel and aluminium are not addressed in them. A recent statement by US Trade Representative Katherine Tai with regard to the progress made by the two sides also indicates that perspectives have been exchanged but nothing else has happened.
Tariff issue still unresolved
The terse statement by the European Commission (EC) on the review and adjustment of the Safeguard measure, which was requested by the Dispute Settlement Body of the World Trade Organisation (WTO), showed that the steel tariff issue is not off the table. This may even be a welcome step to put the justification for Safeguard on a firmer footing once again and thus to pull the rug from under the feet of pending proceedings before the European Court of Justice with publicity effect and thus to finally have the issue of whether Safeguard is justified or not off the table.
Hopes for EU Safeguard Review?
And the current EU Safeguard Review is also likely to fail, even though several EU states have called for it, due to the will of the European steel producing countries and the powerful steel lobbies. The blockade attitude of the German Chancellor Olaf Scholz, SPD, e.g. in the dispute over Leopard 2 deliveries to Ukraine, should be proof enough by now that the German Chancellor will not jeopardise the important SPD electorate within the steel workers and their powerful IG Metall union.
Dispute over subsidies divides EU and United States
An end to Safeguard without having found a successor agreement with the United States is thus becoming increasingly unrealistic. And whether the EU and the U.S. will find a solution to this dispute by October 2023 is anyone’s guess with the Biden administration’s U.S. Inflation Reduction Act meeting with massive criticism in the EU.
China’s reopening: boost for Europe
European companies are particularly benefiting from the end of the zero-covid policy and the resulting boost to the economy because of close trade ties with China. US companies, on the other hand, are much less dependent on business in China; on average, they generate less than five percent of their sales in the Middle Kingdom. This was reported by Deutsche Bank.
Nevertheless, US companies are also benefiting from the “re-opening”. Typically, a one percentage point acceleration in global economic growth is accompanied by a one percent increase in S&P 500 earnings.
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.