EU Steel Overcapacity Regulation: New Permanent Measure in Force from 1 July 2026

The EU’s steel safeguard under Implementing Regulation (EU) 2019/159 expired on 30 June 2026 and has been replaced by a new permanent instrument — the EU Steel Overcapacity Regulation (Regulation (EU) 2026/1384) (the Regulation”). It imposes tariff-rate quotas and an out-of-quota duty, similarly to the steel safeguard measures that expired. The out-of-quota duty has been raised from 25% to 50% to minimize the risk of trade diversion. The Regulation reduces duty-free imports of 26 categories of steel products into the EU by an average of 47% compared with the quotas under the until recently applicable safeguard measures.

Key Timelines

Scope and Out-of-Quota Duty

Tariff-rate quotas (TRQ) are opened on an annual basis for each of the product categories listed in Annex I, running from 1 July of each year to 30 June of the following year. The total annual volume of TRQs is 18,345,922 tonnes. Where a TRQ is exhausted, or where imports of the product categories do not benefit from a TRQ, imports shall be subject to an out-of-quota duty at the rate of 50% ad valorem.

The Regulation applies to all imports of the steel product categories listed in Annex I, including imports originating in a country with which the EU has concluded an agreement providing for tariff preferences or in a country benefitting from autonomous tariff preferences. There are two exemptions: first, products originating in Iceland, Liechtenstein, and Norway are excluded (the EEA is protected); second, the Regulation does not apply to countries in respect of which bilateral safeguard measures apply pursuant to Article 6.

Trade defence instrument (TDI) measures, such as anti-dumping and countervailing duties, apply from the first tonne imported. Where product categories subject to TDI measures also exhaust their TRQ, the 50% out-of-quota duty applies cumulatively on top of the existing TDI duties.

The Commission is empowered to adopt delegated acts to amend the volumes of TRQs listed in Annex II, while ensuring that their total value is neither lower than 14,400,000 tonnes nor higher than 22,200,000 tonnes. This intensifies the ongoing uncertainty for long-term sourcing contracts.

How Quotas Are Determined — Can Importers Anticipate Their Volume?

The total TRQ volume of 18,345,922 tonnes was calculated by applying the EU’s 2013 import market share (approximately 13%) to 2024 EU steel consumption, excluding Belarus and Russia. Half the annual volume (9.15 million tonnes) is reserved exclusively for FTA partners; the remaining half is open to all third countries on an MFN basis. Ukraine benefits from more favourable distribution than other FTA partners.

Country-specific allocations go to countries holding at least a 5% average import share in a given product category over 2022–2024. Those TRQs offer certain predictability as quarterly volumes are fixed and published. However, the relatively low TRQs are expected to be exhausted very quickly, even on the first day of their application, which adds to the uncertainty as the EU TRQ management system does not provide for a real time first-come, first-served TRQ allocation. Importers relying on shared residual MFN or FTA “other countries” TRQ face significantly less certainty, as those volumes are allocated among several exporting countries.

China holds country-specific TRQs in 22 sub-categories but is excluded from the residual “other countries” pool in most of those same categories, meaning it has no fallback access once its named TRQ is exhausted.

From 1 July 2026 to 30 June 2027, unused quarterly volumes carry over to the following quarter. From 1 July 2027, carry-over will be determined per product category by implementing act, considering the import pressure, average quarterly utilization (particularly where above 80%), and downstream supply availability. The allocation of each quarterly TRQ is stopped on the 20th Commission working day following the end of that quarter.

TRQ Volume Predictability in Practice

• The current implementing regulation covers only the first two quarters (1 July – 31 December 2026). Allocations for January – June 2027 will require a new implementing act, and current volumes cannot be assumed to carry forward.
• In shared residual TRQs, mid-quarter exhaustion is a real operational risk; shipment timing should be planned accordingly.

The Melt and Pour Rule

From 1 October 2026, importers must provide verifiable evidence — such as a mill test certificate — identifying the country where raw steel was initially produced in liquid form in a furnace and cast into its first solid state (i.e., slab, billet, ingot, or finished product): the “country of melt and pour.”

Current TRQ distribution off the global TRQ for all products is based entirely on historical import shares (2022 – 2024) and the 2013 market share baseline. Only the origin of the goods counts in TRQ access today and not the country of melt and pour. This will change gradually: from 1 October 2027, melt and pour data collected from importers will begin to inform the distribution methodology and, by 30 June 2028, the Commission must assess whether the country of melt and pour should become the primary basis for TRQ access. If that proposal advances, steel melted in high-overcapacity jurisdictions could lose TRQ access regardless of where it is further processed and acquires new origin.

Producers who re-roll or further process steel as well as all EU importers will need to collect consistent documentation tracing the original melting step, not merely the country of further processing. The implementing act specifying the exact form of evidence required is due by 31 August 2026, following stakeholder consultation, but the discussion currently revolves around the mill test certificate as the most reasonable form. Importers of EEA-origin steel are equally subject to this obligation, to prevent third-country producers from using the EEA exemption as a loophole.

Key Perspectives

For foreign producers:

• Most FTA partners will face a market access reduction well below the average 47% cut. Non-FTA exporters who had less than 5% import share from 2022 – 2024 bear the steepest constraints, confined to the MFN residual pool where they hold no country-specific TRQ.
• Coordinating shipment scheduling tightly with EU importers within quarterly windows is key. Competitive allocation in shared pools makes timing critical, particularly in heavily solicited categories.
• Melt and pour documentary evidence must be ensured through the supply chain by 1 October 2026.
• The 2028 melt and pour TRQ-access assessment represents a structural medium-term risk for any producer whose steel originates in high-overcapacity countries, regardless of where further processing occurred.

For EU importers:

• TRQ management is now a competitive discipline, harder to follow than the TRQ management in the recently expired steel safeguard measures. One needs to monitor the Commission’s allegedly real-time (but allocated only on a daily, not hourly, basis) TRQ utilisation data continuously, particularly in shared residual pools, and align purchase orders to quarterly availability.
• The current implementing regulation on TRQ distribution expires 31 December 2026. A new implementing act is required for January – June 2027; revised allocations may affect supply chain planning and should be monitored closely upon adoption.
• Product scope assessments due by end-2026 and mid-2027 may bring additional downstream products within the Regulation’s reach, whose product scope will likely be reviewed and/or expanded moving forward.
• The Commission’s delegated power to adjust TRQ volumes, the evolving carry-over rules from 2027, and the potential shift to melt and pour as the basis for TRQ access all create regulatory uncertainty that should be addressed in long-term supply agreements.