Could Brexit Shake the European Steel Industry?

As we discussed previously, more imports from China are a bigger challenge for the European steel industry—compared to the fallout from Brexit, or the United Kingdom exiting the EU (European Union). In this part of the series, we’ll explore whether Brexit can prompt the EU to take decisive action against Chinese steel imports.

The EU hasn’t been able to act decisively against higher Chinese steel imports. This ensured that European steel production has fallen steeper this year—compared to some of the other major steel producing regions. With the crisis at Tata Steel in the United Kingdom, protectionism demands started to echo across the EU as well. Observers draw parallels with the US steel industry where companies like U.S. Steel Corporation (X), AK Steel (AKS), and Nucor (NUE) saw a literal change in fortunes after the country levied strict anti-dumping duties on countries including China. Steel prices in Europe haven’t seen a commensurate recovery this year. You can see this in the above graph.

It’s crucial for the EU to get its act together in tackling Chinese steel imports. Earlier, the region was a divided house in imposing higher duties on Chinese steel imports. As ironic as it may sound, the United Kingdom was among the countries favoring the “lesser duty rule” that effectively meant lower duties on Chinese steel products.

With the United Kingdom deciding to part ways with the EU, we could see a campaign against Chinese steel imports in the EU.

Companies like ArcelorMittal (MT) could stand to gain if Europe acts against Chinese steel imports. Meanwhile, US steel companies seem to be sitting well. We’ll explore this in the next part of the series.

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