According to the annual report published by the German Steel Federation (WV Stahl), Germany’s steel industry remained under significant pressure throughout 2025 due to weak demand, rising imports, high energy costs, and ongoing decarbonization challenges.
WV Stahl President Gunnar Groebler stated that the German steel sector is facing a “turning point” driven by the need to achieve climate neutrality while maintaining international competitiveness. According to Groebler, steel producers are technologically capable and willing to transition toward low-carbon steel production, but stable political and economic framework conditions are still insufficient.
Weak demand and global overcapacity weigh on market
The report highlighted continued import pressure caused by persistent global steel overcapacity, while demand from key steel-consuming sectors such as automotive and machinery manufacturing remained weak. At the same time, German producers are being required to invest heavily in hydrogen-based technologies and new low-carbon steelmaking routes.
Germany produced 34.1 million mt of crude steel in 2025, remaining below the 40 million mt threshold considered necessary for sustainable capacity utilization. Germany nevertheless retained its position as the EU’s largest steel producer and the world’s eighth-largest steel-producing country. According to WV Stahl, approximately 70 percent of German steel production still comes from the blast furnace-basic oxygen furnace route, while around 30 percent is produced through electric arc furnaces.
Steel sector seen as strategic industry
WV Stahl stated that Germany’s steel industry directly employs around 80,000 workers, while approximately four million jobs are linked to the broader steel value chain. The federation also emphasized that a climate-neutral steel industry could reduce Germany’s annual carbon emissions by up to 50 million mt.
According to the report, 2025 was characterized not only by economic pressure but also by growing political recognition of steel as a strategically important industry for infrastructure, industrial resilience, defense, and technological sovereignty within Europe.
Federation calls for stronger trade protection
On the trade side, WV Stahl warned that every third mt of steel consumed in the EU now originates from third countries. The federation argued that existing EU safeguard measures have weakened over time and expressed support for the European Commission’s proposed post-safeguard tariff-rate quota mechanism announced in October 2025. The proposed system could help protect European steel production while ensuring supply continuity for downstream industries.
WV Stahl also criticized shortcomings in the EU’s Carbon Border Adjustment Mechanism (CBAM), which officially entered into force on January 1, 2026. The federation stated that the current framework still contains significant loopholes and requires substantial revisions to effectively prevent carbon leakage and ensure fair competition for European steelmakers investing in decarbonization.
Energy prices remain critical issue
High electricity costs remained one of the industry’s biggest concerns throughout 2025. WV Stahl noted that German electricity prices continue to be internationally uncompetitive, creating a major burden especially for electric arc furnace producers and for the broader transition toward climate-neutral steelmaking.
The federation welcomed Germany’s decision to subsidize transmission grid fees starting in 2026, noting that grid charges had increased by around 130 percent and generated approximately €300 million in additional annual costs for the steel sector. However, it argued that the current industrial electricity price support scheme still provides limited relief due to restrictions under EU state aid rules. WV Stahl reiterated its call for an internationally competitive industrial electricity price of €50/MWh inclusive of grid fees and surcharges while also demanding that electricity price support mechanisms be fully combinable with compensation schemes.
Lead markets for green steel seen as essential
The federation also emphasized the importance of developing lead markets for low-carbon steel. WV Stahl welcomed the inclusion of climate-friendly steel within automotive fleet emissions regulations and called for public procurement rules favoring local content and low-emission materials in order to stimulate demand for European green steel products.
Kerstin Maria Rippel, CEO of WV Stahl, described 2025 as a year of “historic collapse” in steel demand combined with high energy prices and strong import pressure from global overcapacity, particularly from Asia. According to Rippel, 2026 must become a “year of securing Germany as an industrial location” through stronger trade defense measures, lower energy costs, and reforms to both the EU ETS and CBAM systems.
