Steel overcapacity: Council adopts mandate on new rules to protect EU steel industry from global overcapacity 18:45 The Council adopted its negotiating mandate on new rules to[...]

The Council today adopted its mandate to negotiate with the European Parliament on the regulation addressing the negative trade-related effects of global overcapacity on the EU steel market. The new regulation is designed to replace the existing steel safeguard measure, which is due to expire on 30 June 2026.

The Council's mandate strikes a balance that aims to maintain the necessary high level of protection for the European steel industry, which is vital to the EU's economy and security, while introducing key flexibility and consideration for downstream steel users.

Main changes agreed by the Council

The Council's mandate maintains the core protective elements of the Commission's proposal, notably the substantial reduction in import quotas (limiting tariff-free import volumes to 18.3 million tonnes a year, a reduction of 47% compared to 2024 steel quotas) and the doubling of the out-of-quota duty to 50% compared to 25% under the current steel safeguard. At the same time, it incorporates several amendments to increase flexibility, legal clarity and consideration for the economic interests of downstream users.

Downstream industries

The Council has placed a greater focus on balancing the protection of steel producers with the economic interests of steel-using downstream industries, incorporating Union interest as a guiding principle to ensure explicit consideration for all economic operators and final consumers when the Commission allocates tariffs quotas, applies bilateral safeguard measures or amends the volumes of tariff quotas.

The rules on the administration of tariff quotas have been adjusted to ensure greater flexibility. Specifically, the Council allowed for unused tariff quota volumes in one quarter to be carried over to the next quarter within the same yearly period of application of the tariff rate quota.

Council has also added a new element for consideration when quotas are amended ensuring attention on the potential substantial price increases seriously undermining the competitiveness of downstream industries.

Quota flexibility

The framework set out under this regulation establishes tariff quotas and an out-of-quota duty that apply to all third countries, with the exception of EEA countries. The Commission can, via a delegated act, adjust tariff quota volumes, taking into account the EU interest and a series of elements. The Council clarified that the total value of these adjusted quotas must be capped to remain between 15.2 and 22.2 million tonnes.

Melt and pour requirements

To avoid circumvention and increase supply chain transparency, the regulation requires importers to provide evidence of the country of melt and pour. The Council introduced significant clarifications regarding its implementation:

• the requirement for importers to provide evidence on the country of melt and pour will apply from 1 October 2026; this transition period allows economic operators and customs agencies time to adjust to the new rule
• within 2 years, the Commission will have to assess whether to designate the country of melt-and-pour as the basis for country-specific tariff quota allocations. If the Commission concludes that it is necessary to do so, it will present a new legislative proposal to that effect

Council also underlined the necessity for the Commission to carry out consultations with relevant stakeholders before introducing any requirements to carefully assess the potential administrative burdens for importers and government agencies and ensure an effective requirement.

Review and transparency

Compared to the Commission's proposal, the Council mandate brings forward the date for the Commission to assess the possibility to expand the scope of the regulation, from 2 years to 18 months. It also ensures the Commission will launch process consultation process to this end with relevant stakeholder by 1 October 2026.

The period for the first overall review of the regulation's effects on the steel market and the EU interest has been shortened to 4 years from the date of entry into force, with subsequent evaluations every two years thereafter. Council also added further attention in the review for the impacts on downstream industries.

A new provision also requires the Commission to make an online contact point available for EU economic operators to request relevant information concerning the implementation of this regulation.

Next steps

Once the European Parliament adopts its position, the co-legislators will start negotiations with a view to finalising the work on the text. The regulation will enter into force once adopted by both institutions and published in the official journal.

Background

Steel is a material essential for the EU economy, including for its green transition and strategically important sectors such as defence. The EU steelmaking industry is the world's third largest producer, directly employing around 300,000 people and sustaining regional economies across member states.

This key industry is currently facing significant pressure from unsustainable levels of global overcapacity, which is projected to grow to 721 million tonnes by 2027, more than five times the EU's annual consumption. This overcapacity, combined with trade-restrictive measures from third countries that limit imports into their markets, has made the EU market the primary recipient of global excess steel. This has led to increasing imports, low capacity utilisation (67% in 2024), high EU manufacturing costs, and ultimately threatens the industry's long-term ability to invest in decarbonisation.

To address these critical challenges, including the loss of some 65 million tonnes of capacity and up to 100,000 jobs since 2007, the Commission announced its intention to prepare a new steel measure in March 2025.

• Commission's proposal on the regulation
• European steel and metals action plan (European Commission)