SteelOrbis talked to EUROMETAL president Alexander Julius about the challenges the EU steel industry is facing.
How would you describe the current steel demand trends in the EU steel market across major sectors (construction, automotive, machinery, etc.)?
Steel demand in Europe remains weak and uneven across sectors. The construction industry - traditionally the largest steel consumer - is suffering from high interest rates, lower public investment and a slowdown in housing and infrastructure projects.
The automotive sector, after a short rebound post-pandemic, has again softened, reflecting both subdued consumer confidence and the complex transition toward electric vehicles. Machinery and mechanical engineering remain relatively resilient, supported by export activity, but here too we see investment hesitation.
Overall, we estimate that European steel demand in 2025 is still below pre-pandemic levels, and recovery is unlikely before mid-2026 unless macroeconomic and policy conditions improve.
How are high energy prices affecting output, investment and competitiveness?
High and volatile energy costs remain one of the most severe structural challenges for the European steel value chain. Even though prices have moderated compared to the 2022 peaks, Europe continues to face a persistent energy cost gap of two to three times compared to Asia and the US.
This cost differential is discouraging new investment, reducing margins and eroding competitiveness along the entire supply chain - from primary steelmaking to distribution and fabrication.
Many downstream users are scaling back production or relocating certain processes outside the EU. If not addressed through a coherent energy and industrial strategy, this could lead to long-term deindustrialisation and loss of strategic capacity.
Do you foresee further consolidation or restructuring in the European steel industry?
Yes, further consolidation and restructuring are very likely - not only among steel producers, but also across the entire distribution, service center and processing landscape.
Companies are increasingly seeking to optimize scale, reduce fixed costs and realign their business models to prepare for the green transformation and adapt to a low-margin, high-volatility environment.
Recent data from the EUROMETAL Financial Benchmark for Steel Service Centers confirm this trend: 2024 results were significantly worse than expected, with widespread pressure on margins, inventories and working capital. 2025 is anticipated to be even more challenging, particularly for independent SMEs who are struggling with low demand, cheap imports of steel derivatives and rising compliance burdens (including CBAM and DPP requirements).
However, consolidation must not come at the expense of market diversity and supply resilience. Europe’s steel distribution sector is composed primarily of small and medium-sized enterprises, which play a vital balancing role in connecting supply and demand, especially in regional and specialised markets.
Preserving a competitive, flexible and diversified distribution network is essential for innovation, customer service and ensuring that green and digital transitions do not lead to over-centralisation or the erosion of supply chain responsiveness.
What are the effects of geopolitical developments on trade routes?
Geopolitical fragmentation has profoundly reshaped global steel trade routes. The war in Ukraine, regional instability and shifting alliances have increased uncertainty, raised transport costs and disrupted established supply chains.
At the same time, US steel tariffs and trade restrictions have caused a redirection of steel and steel derivatives - originally destined for the US - toward Europe. We are now seeing a growing influx of derivatives, such as fabricated steel components and semi-finished products, entering the EU market outside the scope of traditional trade defence measures, and often bypassing CBAM and safeguards.
This surge is compounding an already difficult situation where Asian overcapacity continues to displace domestic EU output, depress prices and undermine the viability of local manufacturing.
We are also witnessing a rising trend of circumvention practices - including false origin declarations, re-rolling in third countries and tariff reclassification - particularly for steel derivatives.
These developments underline the urgency for stronger customs enforcement, harmonised rules of origin and robust traceability systems, especially with CBAM implementation starting in January 2026 and the Digital Product Passport (DPP) expected to follow.
Without clear and enforceable controls, Europe risks becoming the dumping ground for surplus high-emission steel and derivatives that are no longer accepted in more protected markets.
What are your expectations for steel demand and prices in the short to medium term?
In the short term, steel demand is expected to remain weak through winter 2025-26, with modest restocking early next year.
Price levels are likely to fluctuate within a narrow band due to subdued demand, high inventories and strong import competition.
Looking to 2026, a gradual recovery could come from infrastructure, renewable energy and defense investments, but that depends on access to financing and public procurement reform.
Decarbonisation costs will also start to be more visible in pricing as CBAM enters its enforcement phase in January 2026, making the cost of carbon an integral part of market dynamics.
Are you optimistic or cautious about the EU steel sector’s medium-term competitiveness?
We remain cautiously optimistic - provided Europe can reconcile its climate ambitions with industrial competitiveness.
European companies have the technology, innovation and commitment to lead the global green steel transition. But this requires predictable regulation, affordable energy and fair trade conditions.
If these pillars align, Europe can remain competitive on value, quality and sustainability.
If not, we risk a ‘green paradox’ - achieving lower emissions at the expense of losing industrial production and jobs to regions with weaker standards.
How do you evaluate the latest announcement from the EU regarding safeguard policy?
The European Commission’s post-safeguard proposal (COM(2025)726), presented in early October, confirms that trade defence remains high on the EU agenda - but it also raises concerns for the downstream sector.
While safeguards were designed to stabilise the market, the new post-safeguard framework risks shifting additional pressure onto distributors, service centers and manufacturing SMEs, who already face declining demand and intense import competition.
Critically, steel derivatives remain outside the scope of current measures, despite their growing role in undermining EU industrial competitiveness.
These products - from assembled tubes and components to fabricated steel parts - are entering the EU unchecked, often containing dumped or high-emission steel that escapes both safeguards and CBAM coverage.
This loophole must be addressed urgently to prevent further erosion of Europe’s manufacturing base.
Are these trade measures effective in ensuring a level playing field, or do they distort competition?
Trade measures are necessary to defend fair competition, but their design is key.
Today’s framework often protects upstream producers while exposing downstream users to restricted supply and price volatility.
For a truly level playing field, we need a balanced approach that targets unfair practices without penalising legitimate industrial users.
EUROMETAL supports country-specific quotas and Melt & Pour origin rules to close existing loopholes and ensure that every tonne of steel placed on the EU market meets the same environmental and social standards. But, if imported derivatives do not become part of those measures to the same extent, the proposed EU measures will have an immediate negative effect on the EU downstream and manufacturing industry accelerating the de-industrialization of Europe, leaving EU steelmakers without consumers.
What do you think the main challenges of CBAM are and what effects do you anticipate on trade flows?
The full implementation of CBAM in January 2026 will be a turning point for global steel trade - and for EU distributors in particular.
The concept can be right, but the execution remains complex. Importers face enormous challenges in collecting verified emissions data, navigating multiple reporting systems, missing default values, late sale of certificates and ensuring alignment with customs procedures.
This asymmetry of information and timing poses a significant operational and financial risk, especially for small and medium-sized traders and service centers.
In parallel, many steel derivatives and processed products remain outside CBAM’s current scope, creating an incentive to shift emissions-intensive production further downstream - and potentially leading to circumvention through assembled or fabricated goods.
To succeed, CBAM must evolve into a comprehensive, transparent and enforceable system, fully integrated with customs procedures and extended to cover the entire steel value chain - including downstream products and steel-containing goods.
Without this, CBAM risks distorting trade flows, penalising compliant actors and failing to deliver its environmental objectives.
Do you think current EU funding mechanisms are sufficient to support the green transition in steel?
Current funding mechanisms - such as the Innovation Fund, ETS revenues and national recovery plans - are essential but insufficiently accessible and fragmented.
Most support is directed toward large upstream producers, while distributors, processors and fabricators - the ‘missing middle’ of Europe’s industrial ecosystem - remain largely excluded.
A sustainable transition requires investment at every stage of the value chain. That means supporting logistics, warehousing, digitalisation and certification infrastructure - the building blocks of a green steel market, not just green production.
How do you see the balance between environmental targets and global competitiveness?
This balance is the defining challenge for Europe’s industrial policy.
The steel sector is fully committed to achieving climate neutrality, but ambition must be matched by pragmatism and global coordination.
If environmental regulation advances faster than investment support and trade defence, Europe risks carbon leakage in disguise - where emissions are simply outsourced to third countries.
The right path forward lies in aligning environmental targets with competitiveness tools: stronger CBAM enforcement, fair trade measures and inclusive funding for the entire supply chain. Only then can Europe lead the global green steel transition without sacrificing its industrial foundation.