European Steel Industry: Impact of the Import Quota
| Case Code: ECON092 Case Length: 11 Pages Period: 2018-20 Pub Date: 2020 Teaching Note: Available |
Price: Rs.300 Organization : European Steel Industry Industry :Metals & Mining Countries : Belgium Themes: Macroeconomic Environment/ International Business/ Global Economy;Trading Blocks |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
On June 30, 2020, the European Union (EU) announced that steel import quotas would go up by 3% during the 12 months starting July 1, 2020. The EU had introduced import curbs on steel in 2018 to prevent global shipments from being redirected to the European market after the US imposed a 25% steel tariff that discouraged many exporters from entering the US market. The European steel industry was almost stagnant in 2019 due to multiple factors such as a cut in domestic production, persistent global overcapacity, growing imports, and weak demand from the manufacturing sector. The fall in European steel production compelled the manufacturers to place workers on short-time working hours or initiate temporary lay-offs. It resulted in a cut in new steel orders (down 70-75%), resulting in the idling of steel plants and even the shutdown of a few.
The COVID-19 pandemic had a massive impact on the steel sector across the world, and Europe was no exception. As of June 2020, the demand for steel in Europe had dropped by 50% since the start of the pandemic in March 2020, triggering the fear that jobs could be lost and sales impacted adversely if more and more inexpensive steel was imported. .
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