EU consultation on steel product scope directly impacts Vietnamese exports

The new regulation reduces the annual duty-free import quota to 18.3 million tonnes, down nearly 47% compared to 2024 levels, while doubling out-of-quota tariffs to 50% and expanding covered product categories from 28 to 30.

Crucially, it introduces a "melt and pour" origin requirement, compelling importers to identify the country where the crude steel was originally melted and poured, rather than where it underwent final processing.

The consultation focuses on four proposed product groups: cast iron tubes and pipes; non-alloy and alloy steel wire; stainless steel wire; and forged bars of non-alloy or alloy steel. Open until September 30, 2026, the assessment results will be announced by December 31, 2026.

According to the Vietnam Trade Office in Belgium and the EU, the 2026 regulation presents two interconnected challenges for Vietnam. First, market demand is weakening; during the five-month period of 2026, Vietnamese steel exports to the EU dropped nearly 18.3% in volume and 23.3% in value year-on-year due to sluggish European consumption and tighter trade safeguards.

Second, the structural "melt and pour" rule leaves Vietnam particularly vulnerable due to its limited domestic crude steel capacity. Vietnamese manufacturers relying on imported billets or hot-rolled steel from third countries for processing will see their exports classified under the raw material's country of origin, leaving some "made in Vietnam" steel ineligible for Vietnam's quota allocation.

On a positive note, domestic production capacity is expanding. The Vietnam Steel Association (VSA) projects crude steel output to reach 27 million tonnes in 2026, a 10% year-on-year increase, with finished steel output estimated at 33 million tonnes and exports around 6 million tonnes.

Sustained growth in domestic crude steel production will help Vietnamese exporters progressively meet the "melt and pour" requirement over the long term.

Tran Ngoc Quan, Head of the Vietnam Trade Office in Belgium and the EU, urged Vietnamese steelmakers to closely monitor the consultation, particularly regarding stainless steel wire and iron pipes, which directly affect key export lines.

Drawing from Vietnam's successful collaboration with European industry bodies to exempt leather products from the EU Deforestation Regulation (EUDR), the office recommended that Vietnamese exporters and industry associations proactively engage EU importers and sector associations to advocate for a necessary transition period suited to Vietnam's production realities.

Drawing from Vietnam's successful collaboration with the European leather association and other partners to exempt leather products from the EU Deforestation Regulation (EUDR), the office recommended that Vietnamese steel exporters and industry associations proactively engage EU importers and relevant sector associations to submit feedback in line with Vietnam's production and trade realities, aiming to secure a necessary transition period.

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