EU steel quotas and industry challenges (with Anna, Tom)

Axel welcomes the new EU steel quota measure as historic, preserving 15 million tons of capacity and 200,000 jobs. But more is needed: level playing field on energy costs, faster renewable deployment, and global cooperation to tackle Chinese overcapacity. Demand is weak but defense and infrastructure spending could help.

Yields

NDX

RUT

Oil

Metals

USD

European Steel Association (EUROFER) 2.5
Trade Association
Axel Eggert 7.0

EU steel quotas and industry challenges (with Anna, Tom)

Asks what the new EU steel quota rules achieve for the sector.

Anna
Axel Eggert

The measure is historic, preserving 15 million tons of steel capacity and 200,000 jobs, shielding Europe from global overcapacity, especially from China.
Asks if it goes far enough and what else is needed.

Anna
Axel Eggert

This is one pillar; we also need a level playing field on energy costs for decarbonization (electricity and hydrogen are much more expensive than coking coal), and protection for downstream industries.
Suggests trading partners may push back, saying Europe needs to be competitive first.

Tom
Axel Eggert

European steel is competitive in technology and innovation, but subsidization in third countries creates overcapacity, and energy costs have risen sharply since COVID and the Ukraine war.
Asks what the priority is to address energy costs.

Tom
Axel Eggert

Faster deployment of renewable electricity to reduce marginal pricing by inefficient gas plants, and member states can reduce energy taxes for energy-intensive industries immediately.
Asks if anything can be done about Chinese overcapacity at a fundamental level.

Anna
Axel Eggert

Yes, revive global arrangements with like-minded partners (US, Canada, UK) to jointly tackle global overcapacity. The EU has a 2.5x trade deficit with China in steel.
Asks about the current health of the sector beyond tariffs, including defense and auto industry challenges.

Tom
Axel Eggert

Demand is weak; production fell to 126 million tons last year (lowest ever). But investment in infrastructure, defense, and new technologies could drive demand. Decarbonization is an opportunity for innovation.

Once demand returns, the sector can make reasonable profits again.

SignalTube

markets at a glance