EC decision on steel quotas and tariffs to affect Smederevo steel mill

The European Commission has proposed a new reduction in quotas, but also an increase in tariffs on steel imports from non-EU countries, which, if the proposal is accepted by all 27 EU member states, will also hit Serbia, primarily its steel mill in Smederevo, which has been owned by the Chinese company Hesteel since 2016.

This will be an additional blow to the steel mill, which is already suffering losses as a result of the introduction of quotas in 2019, which is why it shut down one blast furnace. This reduced production from more than two million to around 1.2 million tons per year, but no workers were laid off.

In the last five years, the steel mill only had a profit in 2021. The largest loss in the last five years was recorded last year - 17.5 billion dinars, while in 2023 it amounted to 16.5 billion dinars. Serbian President Aleksandar Vucic announced the news about the EU tariffs on October 9.

– These are the European Union tariffs on steel, which obviously affect the United Kingdom, Turkey and Serbia the most, but they have also hit all European countries, that is, all European producers, extremely hard. This will put our steel mill in an extremely difficult position. As you know, 5,000 people work there, and as many as 20,000 people are connected to the steel mill. This is a huge problem for us and for our Chinese partners – he said.

The new proposal of the European Commission, in order to protect the steel industry in the EU, is to reduce the quotas for steel imports from 820,000 to 410,000 tons from July 1, 2026, and in case the quotas are exceeded, the tariffs will be increased from 25% to 50%.

Hesteel bought the Serbian steel mill in order to make it easier for China to connect to the European steel market, and since then more than 80% of its production has been intended for export to EU countries. Now the question is whether it is possible to find a replacement for that market.

World steel production has exceeded two billion tons, with China alone producing more than half of that amount, while all EU members together produce around 130 million tons annually.

HBIS GROUP Iron & Steel d.o.o. Beograd

Železara Smederevo d.o.o.

Hesteel

Smederevo steel mill

Aleksandar Vučić

quotas on import of steel to EU

tariffs on import of steel to EU