Tariff-rate quotas introduced by the European Union on July 1 are unfair to Ukrainian pipe and railway wheel producer Interpipe, and their negative impact will become apparent as early as next month, the company’s Government Relations Director, Natalia Sydoruk, said during a discussion organized by the Centre for Economic Strategy.
“To illustrate just how detrimental the European restrictions are for us, as of yesterday, the 22nd day of the quarterly quota period, our company had already used 45% of its quota… Starting next month, we will begin to see the practical consequences of the European Union’s restrictions. Once the quota is exhausted, we will only be able to supply the European market if we pay a 50% tariff,” she said.
Sydoruk recalled that Interpipe had officially stated that, due to the European Commission’s failure to take Eurostat data into account and because of technical errors, the quota allocated to the company had been calculated unfairly and underestimated by approximately 30%. As a result, the quota now amounts to roughly 50% of Interpipe’s deliveries to the European market last year, although Europe accounted for 80% of the company’s total exports.
“We are facing a situation where the European Union is rather artificially restricting imports of steel products into the European market… All attempts to prove this error during negotiations have been unsuccessful,” Interpipe’s Government Relations Director said.
She added that the company is concerned that the dismissal of Deputy Prime Minister for European and Euro-Atlantic Integration and Trade Representative Taras Kachka from the government could negatively affect efforts to have the European Commission revise its decision.
“We very much hope that, as the president has stated, he will continue to perform these functions. However, we all understand that in reality this process will take quite a long time,” Sydoruk explained, expressing her concern.
She also recalled that a 50% tariff has been applied to Interpipe’s products in the United States since last year, limiting supplies to the U.S. market.
“The U.S. market is there, and we operate in it, but under very limited conditions,” she said.
The Interpipe representative noted that the company’s ability to redirect supplies away from the European and U.S. markets is limited because other global producers, primarily China, which has already fully exhausted its quota, are also entering alternative markets with products that had previously been supplied to Europe. In addition, Ukraine continues to face logistical constraints, particularly following the suspension of port operations.
“Frankly speaking, I do not see any positive signs that we will be able to reorient our exports anywhere quickly or easily,” she said.
Sydoruk said that, in addition to tariff-rate quotas, Interpipe has also been affected by the EU’s new Carbon Border Adjustment Mechanism (CBAM), introduced at the beginning of this year, and that the company believes an error was made in its application as well.
“We are a very low-carbon steel producer and, accordingly, should benefit from preferential treatment in the European market because our emissions are significantly lower than those of our competitors. However, the EU regulations established default values for calculating the cost of CBAM certificates that are almost 10 times higher than our actual emissions,” she explained.
According to her, no supplier to the European Union has yet reached the emissions verification stage because there are still no officially accredited verifiers in the European Union.
“Therefore, the figures from recent months confirm that we have recovered after the winter, but we remain in a constant state of force majeure, with ongoing issues related to electricity, logistics, and restrictions in third-country markets. Under these circumstances, it is very difficult today to speak of any positive outlook,” Interpipe’s Government Relations Director concluded.
Interpipe is Ukrainian industrial company, manufacturer of steel pipes and railway products. Company’s products are supplied to more than 50 countries worldwide through network of sales offices located in key markets of Middle East, North America, and Europe.
Within company’s structure are six industrial assets: Interpipe Nyzhniodniprovsky Pipe Rolling Plant (NTRP), Interpipe Novomoskovsk Pipe Plant (NMPP), Interpipe Niko Tube, Dnipropetrovsk Vtormet, Dniprosteel electric steelmelting complex under Interpipe Steel brand, and Interpipe Roman pipe plant in Romania. Total number of company’s employees is about 9,500.
Ultimate owner of Interpipe Limited is Ukrainian businessman and philanthropist Viktor Pinchuk and members of his family.