#Traditional Suppliers Face Mounting Barriers

The European steel import market underwent a profound transformation throughout 2024 as the EU implemented increasingly stringent trade defense mechanisms. In April, the bloc tightened its safeguard measures, followed by the introduction of provisional anti-dumping duties specifically targeting hot-rolled coil (HRC) imports from Egypt, Vietnam, and Japan. These three countries had been major suppliers to the European market, collectively accounting for 2.45 million metric tons of HRC imports in 2024, representing approximately 25% of the EU's total HRC imports of 9.7 million metric tons. The new restrictions created immediate disruption for European buyers who had established supply chains with these traditional partners. Quota caps were particularly impactful, with the EU imposing a 13% limitation on the "other countries" quota for HRC while simultaneously reducing quarterly allocations for key suppliers by 10-25%. This regulatory tightening created immediate uncertainty in the market, with many importers forced to rapidly reconsider their sourcing strategies amid concerns about quota availability and additional costs associated with duties.

#Regulatory Complexity Burdens Smaller Market Players

The cumulative effect of multiple trade defense instruments has created a particularly challenging environment for smaller companies in the European steel sector. "Importing steel was made close to impossible, especially for smaller companies which can't handle the costs [of CBAM, duties, etc.]," noted a European buyer familiar with the situation. The Carbon Border Adjustment Mechanism, which began its transitional phase in October 2023, adds another layer of complexity to steel imports, requiring detailed emissions reporting and potentially significant additional costs. Unlike larger corporations with dedicated compliance departments and financial resources to navigate these regulatory hurdles, smaller businesses often lack the administrative capacity to manage the increasingly complex import procedures. This disparity threatens to further consolidate the market, potentially reducing competition as smaller players either exit the import business or significantly scale back their operations. The situation highlights how trade defense measures, while designed to protect domestic industries, can inadvertently create structural advantages for larger market participants with greater resources to manage regulatory complexity.

#Import Volumes Remain Resilient Despite Restrictions

Despite the challenging regulatory environment, EU HRC imports actually increased slightly in 2024, reaching 9.7 million metric tons compared to 9.24 million metric tons in 2023, according to Global Trade Tracker statistics. This 5% growth suggests that European demand for imported steel remains robust, driven by factors including competitive pricing from certain origins and potential gaps in domestic supply for specific products or grades. However, the composition of these imports has shifted dramatically as buyers sought alternative sources unaffected by the new trade measures. The resilience in overall import volumes indicates that European steel consumers continue to require substantial quantities of imported material to supplement domestic production, even as they navigate the complex web of trade restrictions. This persistent demand for imports highlights the delicate balance EU policymakers must maintain between protecting domestic producers and ensuring adequate supply for steel-consuming industries that remain dependent on competitively priced imports for their manufacturing operations.

#Southeast Asian Producers Capitalize on Market Opportunity

With traditional suppliers facing significant trade barriers, Southeast Asian steel producers have moved quickly to fill the supply gap in the European market. Indonesia and Malaysia have emerged as particularly important alternative sources, rapidly increasing their market share as European buyers sought options unaffected by existing trade defense measures. The shift has been dramatic, with Indonesia already supplying 86,918 metric tons of HRC to the EU in the first quarter of 2025, compared to just 22,684 metric tons during the same period in 2024. This represents a nearly fourfold increase in shipments, reflecting the country's aggressive push into the European market. Indonesia's total HRC deliveries to the EU reached 249,018 metric tons in 2024, establishing it as an increasingly important supplier. Malaysian mills have followed a similar trajectory, with European buyers turning to them as alternatives to traditional sources now subject to duties or quota limitations. This rapid market penetration by Southeast Asian producers demonstrates the flexibility of global steel supply chains and the ability of producers to quickly redirect exports to markets offering favorable access conditions.

#Buyers Adopt Cautious Approach Amid Uncertainty

The volatile regulatory environment has fostered a notably cautious approach among European steel buyers. With reduced quarterly allocations for key suppliers and strict quota caps, importers have become increasingly hesitant to make substantial forward commitments. Many buyers report adopting a more conservative strategy, placing smaller orders more frequently to minimize the risk of quota exhaustion before their shipments arrive. This caution extends to supplier selection, with importers conducting more thorough due diligence on potential new partners to assess their reliability and compliance capabilities. The uncertainty has also affected pricing negotiations, with some buyers seeking flexible contract terms that account for potential future trade measures. Industry sources report that lead times for import decisions have lengthened as companies perform more extensive risk assessments before committing to purchases. This cautious approach has introduced additional friction into the market, potentially slowing the overall pace of trade even as total volumes remain resilient.

#Trade Defense Measures Likely to Expand Further

Market participants widely anticipate that the EU will extend its trade defense measures to cover emerging suppliers as their market share grows. Sources familiar with EU trade policy note that the sharp increase in HRC deliveries from Indonesia and Malaysia could trigger either an anti-dumping investigation or their inclusion in the "other countries" quota category, with most industry observers considering the latter more probable. "An anti-dumping probe takes nine months or so. Plus, Indonesia's domestic market is not transparent enough to compare domestic and export prices. It's more likely they will be included in safeguards (which takes less time to be implemented)," explained one buyer source. This assessment reflects the EU's established pattern of adjusting its trade defense mechanisms to address shifting import patterns. The inclusion of these emerging suppliers in the safeguard system would allow for quicker implementation than initiating new anti-dumping investigations, which require extensive data collection and analysis. This potential regulatory response creates a challenging dynamic for European buyers, who must continuously adapt their sourcing strategies as the available pool of unrestricted suppliers continues to shrink.

#Supply Chain Reconfiguration Accelerates

The ongoing trade restrictions have catalyzed a fundamental reconfiguration of steel supply chains serving the European market. Importers are increasingly diversifying their supplier base to reduce dependency on any single source that might become subject to future trade measures. Some larger buyers report establishing relationships with mills across multiple continents to enhance supply security. This diversification strategy extends beyond simply finding new sources for standard products, with some companies exploring opportunities to work with mills on developing specialized grades that might face less competition from domestic producers. The supply chain adjustments also include changes to logistics arrangements, with some importers establishing more flexible shipping contracts that allow for destination changes if quota issues arise. Additionally, certain European steel consumers are investigating opportunities to increase their direct procurement activities, bypassing traditional trading companies to gain more control over their supply chains. These multifaceted adaptations reflect the market's response to a trade environment characterized by increasing complexity and unpredictability.

#Domestic Producers Navigate Competitive Landscape

While trade defense measures are primarily designed to protect EU steel producers from unfair competition, the market's ability to pivot to alternative import sources has created a complex competitive landscape for domestic mills. European producers have benefited from reduced competition from traditional large suppliers like Egypt, Vietnam, and Japan, but now face growing pressure from emerging sources like Indonesia and Malaysia. This dynamic has limited domestic producers' pricing power, particularly in standard grade products where substitution is relatively straightforward. Industry analysts note that European mills have responded by focusing more intently on higher-value products where they maintain technological advantages and face less import competition. Some domestic producers have also adjusted their commercial strategies, offering more flexible contract terms to compete with imports. The situation underscores the challenges of using trade policy to support domestic industry in a highly globalized market where supply chains can rapidly adapt to regulatory changes. For European policymakers, this presents the ongoing challenge of calibrating trade defense measures to provide meaningful protection for domestic producers while avoiding unintended consequences that might ultimately undermine their effectiveness.

#Key Takeaways:

• EU steel safeguard measures and anti-dumping duties against Egypt, Vietnam, and Japan have dramatically reshaped import patterns, with these three countries accounting for 25% of the EU's 9.7 million metric tons of HRC imports in 2024 before facing trade restrictions

• Indonesia has emerged as a significant alternative supplier, shipping 86,918 metric tons of HRC to the EU in Q1 2025, nearly four times the 22,684 metric tons delivered in the same period of 2024, as European buyers seek sources unaffected by existing trade measures

• Smaller European companies are particularly challenged by the growing regulatory complexity, including CBAM requirements and shifting quotas, while market participants anticipate that rapidly growing suppliers like Indonesia and Malaysia will likely face inclusion in the EU's safeguard system rather than undergoing lengthy anti-dumping investigations