By Dimitri Rhodes (Reuters) -Shares in European steelmakers rose on Wednesday after the European Commission proposed cutting tariff-free steel import quotas by almost half as part of a plan to
European Steelmakers' Stocks Surge Following EU Import Quota Cuts
Impact of EU's Import Quota Proposal
By Dimitri Rhodes
Market Reactions
(Reuters) -Shares in European steelmakers rose on Wednesday after the European Commission proposed cutting tariff-free steel import quotas by almost half as part of a plan to preserve viable steelmaking in the European Union.
Concerns from Trade Partners
"We interpret the EU’s new safeguarding proposals as positive across the full spectrum of EU Carbon steel producers," analysts from J.P. Morgan said in a note to investors, adding that they expected this to have positive consequences for EU steel prices through 2026.
Impact on European Carmakers
European steelmaker shares were among the top gainers in Europe on Wednesday, with Aperam, ArcelorMittal, Thyssenkrupp and SSAB rising between 3.1% and 4.4% as of 0940 GMT.
Responses from South Korea and UK
Due to rising imports and U.S. tariffs, EU steel producers are operating at only 67% of their capacity. The new measures, in line with those reported by Reuters last week, are designed to push that up towards 80%.
'GAME-CHANGER' FOR EU STEELMAKERS
"The announcement has the potential to be the largest game-changer since the companies were forced to spend billions on decarbonisation with highly uncertain return prospects," Deutsche Bank analysts said in a research note.
Aperam said on Wednesday it welcomed the new measures. ArcelorMittal said on Tuesday it was "relieved" by the proposal.
Thyssenkrupp and stainless steelmaker Outokumpu also said in written statements they welcomed the plan.
"The Commission has clearly recognized that the European steel industry and its associated value chains are in serious danger without effective trade protection," said Dennis Grimm, the CEO of Thyssenkrupp's Steel Europe division.
Some 5.5 million jobs in Germany are directly or indirectly tied to the steel industry, according to data from steel association Wirtschaftsvereinigung Stahl.
CONCERNS AMONG TRADE PARTNERS
Analysts at J.P. Morgan said the proposed import quota cuts could reduce steel imports into the EU by 8 metric tons, positively affecting local steel producers' pricing power.
But European carmakers, who source about 90% of their direct steel purchases in the EU, have concerns about the inflationary impact tighter restrictions would have on steel imports, the European Automobile Manufacturers' Association (ACEA) said on Wednesday.
South Korea’s Industry Ministry said in a statement that the plan was expected to have a significant impact on steel exports to the EU, which is South Korean steelmakers' second-largest export market.
British industry group UK Steel also warned the EU proposals threatened thousands of jobs across the country.
(Reporting by Dimitri Rhodes in Gdansk and Tom Kaeckenhoff in Dusseldorf; editing by Milla Nissi-Prussak and Matt Scuffham)
