Competitiveness, trade, sustainability and restructuring
EU steel production is technology intensive and is highly innovative. Since the sector is facing increasing competition from non-EU countries, the trade policy of the EU aims at ensuring a level playing field and to remove barriers to access to third country markets or to raw materials. To produce steel, the EU imports raw materials such as coal and iron ore. Steel is also 100% recyclable and largely recycled in the EU. It therefore contributes extensively to the sustainability of our society.
An important policy document, adopted in February 2008, on the competitiveness of the metals industries with it's annex , focused on energy, climate change and overall environmental objectives, the role of research, development and innovation, trade issues and access to raw materials.
The industry has a strong competitive position on domestic markets, particularly in high value added products. The EU steel industry is currently producing high quality products for their downstream users. Strong technological links have been established with the main client sectors like the automotive, aerospace and high performance engineering industries to develop tailor-made products. It has a highly skilled manpower and a competitive edge in terms of productivity, organisation, logistics and services.
Nevertheless, the EU steel industry is facing the following challenges:
- The cost and availability of inputs (raw materials, energy, and labour).
- A very large part of the iron ore, coal and energy resources needed by the EU is imported. On the other hand ferrous scrap is sourced mainly within the EU. The iron ore market is dominated by three producers controlling about 70% of seaborne trade.
- Trade in raw materials for steelmaking (ores and scrap) is affected by measures taken in third countries aimed at limiting their own exports of iron ore and/or ferrous scrap.
- The sector is facing competition from third country producers operating under a different legislative framework.
- EU steel producers are increasingly being confronted with new competitors on the world market (namely China, Brazil, India and the Commonwealth of Independent States (CIS countries)).
- The increasingly strict regulations concerning CO2 emissions, pollution prevention and control, and waste.
In order to maintain its market position and face these challenges, the EU steel industry needs to focus on:
- Reinforcing the capacity to innovate and manage the sustainability of the sector, in particular in respect of the EU climate change objectives
- Improving the efficiency and use of raw materials in order to face the eventual consequences of increasing raw materials shortages and rising prices
- Investments in clean technologies, improving energy efficiency, reducing CO2 emissions and energy costs.
A study [3 MB] , under the Competitiveness and Innovation Programme (CIP), was carried out in 2008 by independent consultants who analysed and presented the main issues affecting the competitiveness of the steel sector.
Approximately a third of global steel is traded internationally. Today the EU is the third largest exporter, and the largest global importer of steel. In 2010, Russia was the biggest supplier followed by Ukraine, China and Turkey. The EU imports more than 90% of the iron ore and coal to produce steel.
Because of protective measures, market access to some third countries and access to raw materials are an importantan important issue for the EU steel industry. The EU's trade policy aims at ensuring a level playing field and removing the existing barriers of access to third markets and to raw materials.
Steel is 100% recyclable. In addition, the, the EU has an active recycling industry. Hence the steel industry, through recycling, contributes extensively to the sustainability of our society.
Major environmental policies and regulations relevant for the steel sector are the climate change package, including Emissions Trading Scheme (ETS), the Industrial Emissions Directive (EID) and the REACH Regulation.
Due to the significant reductions in carbon emissions achieved over the last few years, existing technologies have reached limits whereby there is little room for further improvement to reduce these emissions further. An increased effort in research and development (R&D) is needed to develop new cleaner technologies to produce steel. Comprehensive research is being carried out in the framework of the Steel Technology Platform (ESTEP). The ULCOS programme (Ultra Low CO2 Steelmaking) represents the most ambitious project in the steel industry worldwide with the objective to devise breakthrough technologies to reduce carbon emissions by 50% in the long term.
Innovative steel products and their applications significantly contribute to saving energy and decreasing CO2 emissions. The European steel sector is developing and producing modern materials, such as Advanced High-Strength Steel which is indispensable to reduce the weight of passenger cars and trucks. Innovative steel products also play an important role in improving efficiency in power generation and in the development of renewable energy.
Restructuring in Europe began in the 1980s and led to restoring the viability, productivity and to rationalising the sector. The main lesson learnt was that in a global steel market, intervention of the state is no longer the best solution. Restructuring included the closure of companies which were not economically viable, it also lead to privatisation of the sector. State aid, except in the form of social aid, is now strictly limited to the essential assistance needed to guarantee the future viability of these companies.
The model and principles of restructuring of the EU15 in the 1980s helped EU candidate countries establish their own restructuring plans. In accordance with these principles, State aid was targeted at the increasing long-term economic viability of the beneficiary companies and reducing excess capacities. Other lasting benefits can be seen in the continuing use of European funds to promote research and development (R&D) in the steel sector.
EU27 steel producers are today well integrated and are mainly global players with some of them owning operating units on different continents.
The Directorate General for Enterprise and Industry is responsible for assisting Montenegro and Turkey to establish a restructuring plan and to carry out negotiations with the Western Balkan countries.