* Industry warns shipments will be displaced to Europe* Some of the impact could be offset by U.S. operations* European sector recovers some losses (Writes through, updates prices)By Christoph Steitz and Maytaal AngelFRANKFURT/LONDON, March 9 (Reuters) - European steelmakersare pinning their hopes on the European Union being able tonegotiate an exemption from new U.S. steel import tariffs thathave raised fears of a damaging trade warShare prices initially fell across the European steel sectoron Friday, but there was something of a mixed picture, with twoof the bloc's biggest producers saying the move will havelimited impact on them.
U.S. President Donald Trump announced import tariffs of 25percent on steel and 10 percent on aluminium on Thursday,exempting Canada and Mexico while offering the possibility ofexcluding other allies.The European Union responded by saying it would ask theWorld Trade Organization to impose its own measures, adding thatit was hopeful the bloc would be made exempt. Europe is the biggest exporter of steel to the UnitedStates, accounting for nearly 5 million tonnes out of total U.S.imports of about 35 million tonnes a year.
European steel industry body Eurofer issued a statementsaying that the U.S. decision was "damaging andcounterproductive for both the U.S. and EU economies"."The concern for EU steel producers is not only thepotential loss of access to a market with which they have strongcommercial links, but even more that trade deflection towardsthe EU's open market will be large and sudden," said EuroferDirector General Axel Eggert.Shares in ArcelorMittal , Europe's biggeststeelmaker, were down 0.6 percent at 1635 GMT, while India'sTata Steel fell by 4.6 percent. The U.S. representsabout 10 percent of Tata Steel Europe's sales, an industrysource said.Salzgitter (SZGG.DE), Germany's second-largest steelmaker,was down 5.7 percent. The group did not respond to requests forcomment, but its CEO said on Thursday that markets wereoverestimating the impact of the tariffs on its business.German industry body BDI echoed Eurofer's concerns overredirected steel flows but said it was asking for moderation toavoid stoking a trade war."A new wave of protectionist measures would quickly hitGermany," said BDI President Dieter Kempf, adding that about onein every four jobs in Germany depends on exports.The German steel industry is dominated by Thyssenkrupp , which said it supplies between 400,000 and 500,000tonnes of steel a year to the United States. The company'sshares were in positive territory with a gain of 0.6 percent.
MIXED IMPACT
The volumes of steel imported by the United States, withCanada, Brazil and South Korea among the leading suppliers,represented less than 8 percent of the 473 million tonnes ofsteel traded globally last year.Consultancy Wood Mackenzie expects the U.S. tariffs todisplace a maximum of 18 million tonnes of steel, less than 4percent of annual traded volumes.Austria's Voestalpine , regarded as among theworld's most efficient steelmakers, said it might not investfurther in the United States until the political environment isclear.The company said that a maximum of about 3 percent of itssales could be affected by the tariffs and that the "economicrisk remains very manageable, even in extreme cases", though itexpects further exemptions to be agreed by the United States.Shares in the company rose by 1.5 percent. Ratings agency Moody's has said that the tariffs arecredit-negative for European steelmakers.For companies that have operations in the United States, theimpact could be mixed.Swedish steelmaker SSAB said it expected atwo-fold impact from the U.S. tariffs, with a negative impact inEurope, where it generates most of its sales, mitigated by apositive impact in the United States, where it is one of thelargest steel plate producers. Its shares were down 3 percent inlate afternoon trade. .Finland's Outokumpu , meanwhile, said it expects aslightly positive overall impact because of its operations inthe United States and Mexico, though its share price stilldipped by 1.2 percent.The Thomson Reuters Europe Steel Index ,which had slumped by 4.6 percent after Trump's announcement onThursday, recovered some of those losses with a 1.3 percent gainon Friday, though investors will be watching developmentsclosely in the coming days and weeks.
For mining companies that produce the bauxite and iron oreused in aluminium and steel manufacture, anything that hampersfree trade tends to be unwelcome."All other things being equal, increased tariffs are notwelcome because they will hurt poorer countries harder andimpede their development," said Tom Butler, CEO of theInternational Council of Mining and Metals industry body.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^FACTBOX-Top steel exports to the United States EU to respond to U.S. tariffs within 90 days if not exempt ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Michael Shields in Zurich, TomKaeckenhoff in Duesseldorf, Anna Stablum in Stockholm, JussiRosendahl in Helsinki and Barbara Lewis in LondonEditing by Alexander Smith and David Goodman)
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