EU Council | Steel Overcapacity: Council Greenlights New Rules to Protect the EU Steel Market From Global Overcapacity

The Council today adopted a regulation establishing a new framework to protect the EU steel market from the negative trade-related effects of global overcapacity, as outlined in the Steel and Metals Action Plan of 2025. The new rules will replace the current EU steel safeguard measure, which expires on 30 June 2026, ensuring continued protection for the EU steel sector.

” Steel is indispensable to Europe’s industrial base, its green transition and its security. With today’s adoption, the EU is putting in place a stronger framework to respond to global market distortions, protect fair competition and provide greater certainty for both steel producers and downstream industries.” – Michael Damianos, Minister for Energy, Commerce and Industry of the Republic of Cyprus

The regulation introduces a revised tariff-rate quota (TRQ) system aimed at addressing the negative trade-related effects of structural global overcapacity, including a reduction in import quotas and higher duties on imports exceeding those quotas. It also provides greater flexibility for economic operators through rules allowing the carry-over of unused quotas from one quarter to the next only within the same year, while ensuring adequate supply for downstream industries and maintaining compatibility with the EU’s international trade obligations.

To improve transparency and help prevent circumvention, the regulation also introduces provisions related to the ‘melt and pour’ requirement, which identifies the country where the steel was first melted and poured into its initial solid form.

In addition, it establishes a reinforced review mechanism allowing the Commission to assess the scope and effectiveness of the measure and propose adjustments where necessary in response to market developments and evolving global overcapacity conditions.

In a joint declaration accompanying the regulation, the Council, the European Parliament and the Commission reaffirm their commitment to reducing economic dependencies on Russia, emphasising ongoing efforts to diversify steel imports, with the gradual phase-out of Russian steel products.

Next steps

The regulation will be published in the Official Journal of the EU and will start applying from 1 July 2026.

Background

Steel is an essential material for the EU economy, including for its green transition and strategically important sectors such as defence, and vital for the EU’s economic security and social stability. 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. The proposal was then tabled in October 2025.

Compliments of the European Council