SteelOrbis talked to Guido Lipinski, managing director, German Steel Recycling Association (BDSV), regarding latest situation in the EU steel market.
How would you describe the current steel demand trends in the EU steel market across major sectors (construction, automotive, machinery, etc.)?
Overall demand remains weak and uneven across sectors. Construction suffers from high financing costs and a sharp slowdown in residential activity. Public infrastructure projects offer only partial support. Automotive is stabilising but remains below pre-crisis levels. Machinery production is constrained by high interest rates and low investment appetite. Overall, steel consumption in Europe remains at historically low levels.
How are high energy prices affecting output, investment and competitiveness?
High energy prices continue to weigh heavily on European steelmakers. They inflate production costs and squeeze margins, particularly against competitors with lower power and gas prices. Many plants have reduced capacity utilization or delayed low-carbon investments.
For integrated steel plants, competitiveness has eroded significantly. Compensation schemes only partly offset costs, and investors increasingly demand predictable conditions.
In Germany, the transition to lower-carbon production has stalled due to new framework conditions introduced by the federal government, creating uncertainty for investment decisions. Without stable energy prices, clear regulatory guidance, and functioning hydrogen infrastructure, modernization is delayed and site attractiveness is weakened.
Do you foresee further consolidation or restructuring in the European steel industry?
Yes - structural overcapacity, high energy costs, and the massive capital needs for decarbonization will drive further consolidation. Partnerships and cross-border acquisitions are likely.
The takeover offer by India’s Jindal Group for Thyssenkrupp Steel Europe (tkSE) illustrates this trend. Jindal operates an integrated, sustainable value chain - from iron ore mining through direct reduction (DRI) to flat steel production - and intends to integrate tkSE into this process. The goal is to capture synergies in energy efficiency, raw material sourcing and CO₂ reduction.
This demonstrates both the global attractiveness of European technology and the pressure high energy costs and regulatory uncertainty place on the European steel sector.
What are the effects of geopolitical developments on trade routes?
Geopolitical tensions, sanctions and logistical bottlenecks are significantly reshaping global trade flows. Shipments are being rerouted, freight costs are rising and risks are increasing. The EU is responding by strengthening regional supply chains and placing greater emphasis on recycling and the circular economy.
In particular, India is emerging as a key growth market in Asia - both as an expanding steel producer and as an increasingly important destination and sourcing hub for scrap and semi-finished materials. At the same time, African markets are becoming more relevant for raw materials and secondary metals.
What are your expectations for steel demand and prices in the short to medium term?
Short term: subdued demand and limited price movement; modest seasonal upticks possible.
Medium term: gradual stabilisation expected as stimulus programs, safeguard measures and lower energy prices take effect. Global overcapacity, however, will continue to limit upside potential.
Are you optimistic or cautious about the EU steel sector’s medium-term competitiveness?
Cautiously optimistic. Europe has strong technology and recycling foundations, and instruments such as CBAM, safeguard measures and funding programs provide a certain buffer. Sustained competitiveness depends on aligning energy and infrastructure costs with global benchmarks.
How do you evaluate the latest announcement from the EU regarding safeguard policy?
Recent adjustments - including quota refinements and stricter origin definitions - strengthen the internal market and provide investment certainty. However, they carry diplomatic risks and could impact raw material supply. Flexibility and WTO compliance will be key to long-term effectiveness.
The BDSV clearly supports fair and free trade, particularly in scrap steel, as it is crucial for supply security, price stability and the transition to lower-carbon production. Only with this approach can Europe remain competitive in the global “green steel” market.
Export bans, as still demanded by parts of the steel industry, are unacceptable. They only serve to close off markets, do not solve the problems of the steel industry and destroy the functioning circular economy.
Are these trade measures effective in ensuring a level playing field, or do they distort competition?
In the short term, these measures stabilize the market and encourage investment in low-carbon technologies. However, in the long term, they may distort competition if they lead to permanently closed markets. It is particularly important that raw materials such as steel scrap can flow freely, so they can be used where they are most needed and generate the greatest ecological and economic benefit. Striking the right balance is therefore crucial: protection is needed, but it must be combined with global cooperation, transparency, free flow of resources and incentives for innovation.
What do you think the main challenges of CBAM are and what effects do you anticipate on trade flows?
Administrative complexity, data verification and emission transparency are key challenges. There is also a risk of a disproportionate burden on EU exporters.
China, the world’s largest steel producer, already has significant renewable energy capacity and can increasingly produce low-carbon steel. This allows China to meet CBAM requirements and maintain EU market access, while other emerging markets may be disadvantaged. Trade flows could shift further toward China’s low-emission steel.
Do you think current EU funding mechanisms are sufficient to support green transition in steel?
No - current EU funding mechanisms are important but insufficient to support the full green transition in the steel sector. Existing programs like the Innovation Fund, Horizon Europe and RFCS help finance R&D and pilot projects, but they fall short of covering large-scale industrial deployment and long-term hydrogen-based investments. Analysts estimate the industry will need several additional billions per year after 2030 to stay on track for net-zero. Moreover, without competitive energy prices, even well-funded projects risk becoming unviable, as Europe’s high electricity and hydrogen costs continue to undermine investment incentives and global competitiveness. Funding access for small and medium recyclers is especially limited, leaving a critical gap between pilot support and full-scale transformation.
How do you see the balance between environmental targets and global competitiveness?
It’s a tightrope. Ambitious climate goals are essential and can be a competitive edge, but Europe risks carbon leakage. The EU - among the most stringent globally, with binding targets and CBAM - must align climate and industrial policy with realistic transition timelines, international coordination and pragmatic support. In the US for instance, some decarbonization pillars have slowed (e.g., softened auto-emissions path, offshore-wind delays, uneven EV uptake), even as federal incentives remain. A key lever is more high-quality steel scrap: it substantially lowers CO₂ and can reduce costs where electricity and scrap are competitively priced - supporting both sustainability and Europe’s industrial competitiveness.