Turkish steel imports overwhelm several new EU tariff-rate quotas in first weeks

Turkish steel shipments have rapidly exceeded several of the country-specific tariff-rate quotas introduced under the EU’s new Steel Regulation, according to an analysis by MEPS International. The development could leave importers facing substantial additional duties and increase competition for the regulation’s additional quota capacity.

The new system took effect on July 1 and combines reduced tariff-free import volumes with a 50% tariff on volumes exceeding the applicable quotas. Countries that accounted for more than 5% of EU imports in individual steel product categories during the 2022-2024 reference period received country-specific quotas.

Turkish flat steel quotas heavily oversubscribed

According to MEPS, nine Turkish quotas were already exceeded during the opening days of the July-September period. Overall, Turkish material exceeded the newly available quotas by around 438,000 tonnes during the first two weeks.

Flat steel products accounted for a large share of the excess volumes. Turkey’s quarterly quota of 160,574 tonnes for category 1A hot rolled sheets and strips was oversubscribed by approximately 135%. The 69,925-tonne quota for category 4A metallic coated sheets was exceeded by more than 85%, while the quota for category 4B was almost 90% oversubscribed.

Long products were also affected. Turkey’s 59,919-tonne rebar quota had been exceeded by almost 80% by July 13, while imports seeking access to the 61,147-tonne quota for non-alloy and other alloy wire rod were more than 50% above the available volume.

Turkey’s annual tariff-free quotas have been reduced by around 39% to approximately 2.7 million tonnes under the new system.

Importers look to additional quota capacity

Some Turkish shipments could potentially make use of the Steel Regulation’s additional product-specific “overflow” quotas available to countries with EU free trade agreements. Access is intended to operate on a first-come, first-served basis.

MEPS said, however, that market participants remain uncertain about how the mechanism will work in practice.

The impact could be significant for import costs. MEPS calculated that Turkish hot rolled coil arriving in July could face an above-quota duty of around €180 per tonne without access to the additional tariff-free capacity. Full use of the relevant overflow allocation could reduce the estimated duty to around €80 per tonne.

The situation is further complicated by the extended blocking period. Imports arriving above quota during the first 14 days of a quota period may subsequently receive an allocation for customs clearance, with remaining volumes becoming subject to part of the 50% tariff.

New system increases uncertainty for EU buyers

MEPS reported that European steel buyers are becoming increasingly cautious about third-country purchases. The combination of potential above-quota tariffs and CBAM costs can make imported material commercially unattractive.

Some shipments could consequently remain at EU ports rather than being cleared through customs immediately. Importers may also delay decisions in anticipation of changes to future quota allocations.

The European Commission has established quarterly quotas through June 30, 2027, although current allocations apply only until the end of 2026, leaving another review of volumes approaching.

Japan’s steel industry has also criticised the new arrangements. Japanese industry associations described the country's reduced tariff-free access as “inappropriate and regrettable”. Japan has received country-specific quotas totalling almost 798,000 tonnes, compared with average annual exports to the EU of around 1.5 million tonnes during 2022-2024.

Source: MEPS, Photo: Fotolia