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South African steel exporters are bracing for disruption in the EU as a new quota-based import regime takes effect on July 1, alongside a 50% tariff on shipments exceeding set limits.However, market participants are still working through trade data to determine South Africa’s exposure, with attention focused on product categories and how export flows have shifted over time.The EU’s framework introduces fixed annual import quotas at standard tariff rates, with a 50% duty applied to volumes above those thresholds. The measures, contained in regulation 2026/1384 published on June 24 2026, apply to all steel exporters, including those with existing trade agreements with the bloc. The system will run annually from July 1 to June 30.Rather than imposing a blanket restriction, quotas will be allocated by product category and country, based on historical import flows into the EU.The EU said the measures are designed to deal with persistent global overcapacity in steel production, which has been building since 2013. Allocations will be based on import volumes from 2022-24, with 2013 used as a broader reference point for global production trends.XA Global Trade Advisors COO Pieter du Plessis said South Africa had previously benefited from a trade framework with the EU that supported increased market access and export growth in certain steel categories. However, that growth may now work against exporters under a regime that ties tariff protection to long-term import patterns.“We had the benefit of a trade agreement that encouraged trade, and under the spirit of that agreement, we grew our exports to the EU,” he said.Those gains, he added, could now result in some product categories exceeding quota limits and facing higher tariffs, with volumes that increased under the agreement potentially pushed into out-of-quota duty rates.This raises broader questions about predictability in trade relationships and the purpose of trade agreements, he said. While such frameworks are intended to encourage trade, their outcomes can become difficult when growth achieved under them is later constrained through new restrictions on specific product categories.For South Africa, the key uncertainty is how recent export performance compares with the EU’s historical benchmarks, which will determine how much volume remains within the lower tariff allowance.Du Plessis said the assessment is focused on aligning South African export flows with EU product definitions and tracking how they have evolved over time.“We are still looking very closely at this. The key is to match what we export into the EU’s categories and then assess how those volumes have changed over time,” he said.“The impact for South Africa will depend on whether recent export growth has pushed certain product categories above those historical reference levels, which would determine how much volume remains within the lower tariff allowance.” There is also uncertainty over whether parts of South Africa’s steel export basket now exceed those thresholds, potentially exposing shipments to the 50% tariff.“The scale of exposure remains unclear. We don’t have those answers yet. We are working towards it,” Du Plessis said.Potentially affected exporters include ArcelorMittal South Africa, Columbus Stainless and Duferco, along with smaller producers and mini-mills.Beyond direct exposure, industry participants are also concerned that trade diversion could intensify competition in alternative markets as exporters redirect volumes from the EU.“Increased competition for alternative destinations could add further pressure on prices as displaced volumes are absorbed elsewhere,” said Du Plessis.
