European Steel Stocks Surge as EU Plans to Halve Tariff-Free Import Quotas

European markets climbed on Wednesday as investors reacted positively to the European Union’s proposal to slash tariff-free import quotas on steel and double import tariffs from 25% to 50% for excess shipments. The move, aimed at protecting domestic producers from cheap global imports, sparked a rally in steel stocks across the continent while stoking fears in the automotive sector over potential price hikes.

The pan-European Stoxx 600 index rose 0.5% in morning trading, with most major bourses posting gains. France’s CAC 40 climbed 0.8%, recovering from earlier political volatility, while Italy’s FTSE MIB and Germany’s DAX rose 0.8% and 0.4%, respectively. The U.K.’s FTSE 100 also gained 0.4%, as investors weighed the implications for Britain’s struggling steel sector following Brexit.

Steelmakers were the clear winners of the day. Swedish producer SSAB jumped 4%, while Thyssenkrupp and ArcelorMittal advanced 4% and 3.6%, respectively. Analysts say the EU’s move could help stabilize the region’s steel industry, which has been grappling with global overcapacity and high energy costs. However, the U.K.’s steel association warned that the new tariffs could “deal an existential blow” to its already fragile industry.

In contrast, automakers slid sharply amid concerns that higher steel prices would squeeze profit margins. BMW led losses with a 7% decline after lowering its margin guidance due to weak China sales, while Mercedes-Benz and Porsche both fell over 2.5%. Sigrid de Vries, Director General of the European Automobile Manufacturers’ Association, cautioned that the EU must “find a better balance between protecting steel producers and supporting industries that depend on steel.”

Beyond steel and autos, SoftBank Group made headlines after agreeing to buy the robotics division of Swiss engineering firm ABB for $5.4 billion, sending ABB shares up 1.3% to a two-year high. Meanwhile, France remained under investor scrutiny following the resignation of Prime Minister Sebastien Lecornu, who was granted 48 more hours by President Emmanuel Macron to negotiate a political truce. Investors also looked ahead to German industrial production data for further economic signals, as U.S. markets traded flat and Asia showed little momentum overnight.

source: cnbc