Brussels (VNA) – The European Commission (EC) has recently launched its first targeted consultation to define product scope under the European Union’s (EU) Steel Regulation, establishing a new safeguard framework that is far stricter than the previous regime and could directly affect Vietnam’s steel shipments.

The regulation slashes the duty-free import quota to 18.3 million tonnes a year, a nearly 47% cut from the 2024 levels, while doubling the out-of-quota tariff to 50%. Product coverage has also widened from 28 to 30 categories.

Critically, the regulation introduces a “melt and pour” traceability rule, forcing importers to declare the country where steel was originally melted and cast, not just where final processing took place.

The current consultation zeroes in on four product groups being evaluated for inclusion, including cast iron pipes, tubes and hollow profiles; non-alloy and other alloy steel wire; stainless steel wire, and non-alloy and other alloy forged steel bars.

The consultation stays open through September 30, with results due no later than December 31, 2026.

The Vietnam Trade Office in Belgium and the EU warned that the 2026 Steel Regulation poses two distinct but tightly linked challenges.

The first is market-driven. In the first five months of this year, Vietnam’s steel exports to the EU tumbled nearly 18.3% in volume and 23.3% in value year on year. The slide began well before the new rules, hammered by weak European demand and mounting trade protection.

The second, more structural, challenge comes straight from the “melt and pour” rule. Vietnam is acutely exposed because its domestic crude steel capacity remains limited.

Vietnamese mills that import billets or hot-rolled coil from overseas, chiefly from Asia, for further processing and re-export to the EU will see their quotas tied to the raw material’s country of origin, not Vietnam. That means steel “made in Vietnam” by processing standards could be locked out of Vietnam’s quota when it reaches the EU borders.

On the other hand, the Vietnam Steel Association (VSA) forecast that Vietnam’s crude steel output could reach 27 million tonnes this year, up 10% annually, with finished steel production pegged at 33 million tonnes and exports at roughly 6 million tonnes.

A sustained expansion of domestic crude steel capacity would, over time, put Vietnam in a stronger position to satisfy the melt-and-pour requirement.

Tran Ngoc Quan, head of the Vietnam Trade Office in Belgium, stressed that for now, Vietnamese steel exporters must track the consultation closely, particularly stainless steel wire and steel pipes, two categories under review that could directly hit some local shippers.

Pointing to Vietnam’s earlier success in working with the European leather industry and other nations to get leather commodities carved out of the EU Deforestation Regulation, the trade office urged Vietnamese steel exporters and the VSA to step up engagement with EU importers and industry associations. The aim is to submit comments reflecting Vietnam’s actual production and trade realities and, at a bare minimum, secure a transition period long enough for companies to adapt./.