Key takeaways:
Safeguarding steelmaking in Europe, energy supply, decarbonization of the regino’s steel industry, implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM), trade measures and the emerging green steel market were at the core of discussions during the event.
Currently, approximately 55% of steel in Europe is produced using the blast furnace-basic oxygen furnace (BF-BOF) method, while about 45% is made through the electric-arc furnace (EAF) process. While the EU shifts toward cleaner technologies to achieve its goal of net-zero carbon emissions by 2050, the share of steel produced via the EAF route is expected to rise to around 57%
Between 40 million and 50 million tonnes per year of new green steelmaking capacity – using electric-arc furnaces (EAFs) alone or EAFs and direct reduced iron (DRI) – is expected to come online in Europe in 2026-30, Fastmarkets’ research team estimates.
The energy-intensive nature of steel production leads to high electricity consumption. With the switch to EAFs, it would be expected that the sector’s electricity consumption would only increase.
Consequently, access to renewable energy at affordable prices has become a crucial factor in European steel industry decarbonization efforts.
The energy needed to feed new capacities is 165TWh, of which 90MWh will be needed for hydrogen production. This was estimated to require 2.1 million tpy via water electrolysis, Henrik Adam, executive chairman of Tata Steel Netherlands, said during his presentation at the event.
In Europe, electricity demand will double by 2030, reaching 165TWh compared with 75TWh in 2010-20, and will quadruple by 2050. Some 230TWh will be needed by 2050 just for hydrogen production, Adam said.
But European steel market participants suffer from higher structural costs compared with Asian and even US market participants.
Electricity prices in Europe remain significantly higher than in many other regions. Industrial rates often exceed €100 ($118) per MWh, while in places such as the US and China, costs typically range between €30 and €50 per MWh. This stark difference poses a major competitiveness challenge for energy-intensive industries such as steel manufacturing.
In such circumstances, decoupling energy-intensive ironmaking from steelmaking has become an omni-present discussion point.
Antonio Marcegaglia, chief executive officer of steelmaker Marcegaglia, told Fastmarkets that importing hot-briquetted iron (HBI) and DRI from origins such as the Middle East-North Africa region (MENA), where HBI/DRI production is more commercially viable, was one possible scenario in coming years.
“I think there are some interesting projects [in Europe] which are aiming to use cheap energy,” he said, “especially in the Nordic [states], such as Stegra and Hybrit – placed in the North [and] taking advantage of a nice mix of renewable [energy] availability. Or in France [benefitting from nuclear energy] to support some green hydrogen-based projects…
“There will be some DRI available for non-integrated [steelmakers] in Europe,” Marcegaglia added, “but I do believe that if we want to take [decarbonization] seriously] we will need to rely on other sources [of DRI/HBI], where gas is cheaper and allows competitive DRI/HBI production – particularly the MENA region.”
Industry sources estimated that the volumes of green steel traded in Europe were less than 100,000 tonnes in 2024.
Buyers’ remain unwilling to pay a premium, and weak market conditions have paused or slowed some decarbonization projects.
Very few suppliers were able to offer “physically produced green steel, with emissions proved by Environmental Product Declarations [EDPs] below 1 tonne of CO2 per 1 tonne of steel [for Scope 1, 2, 3 emissions],” one distributor said.
“One can reach net-zero [emissions] with [carbon] offsets, but some buyers refuse to deal with such steel, claiming it has been ‘green-washed’,” a major distributor told Fastmarkets.
European mills were offering premiums for EAF-produced green steel with emissions for Scope 1, 2 and 3 carbon emissions below 0.8 tonnes per 1 tonne of steel at a minimum of €200 per tonne, but actual tradeable values were lower.
On the sidelines of the event, buyer sources estimated tradeable values for such steel at €100-150 per tonne.
“There are a lot of ‘useless’ inquiries – buyers come for test batches, looking to buy one coil, or a very small amount,” a second buyer source said on the event sidelines. “For such inquiries, mills give firm high offers of €200 per tonne and higher. For real buyers and big volumes, deals can be sealed at €100-130 per tonne.”
Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €130-180 per tonne on July 3, down by €20 per tonne from €150-200 per tonne seven days earlier.
Steel production accounts for roughly 7% of global carbon emissions, according to the World Steel Association.
Nevertheless, its carbon footprint remains lower than that of some other materials. For example, producing one tonne of carbon fiber emits around 20 tonnes of CO2, while aluminium production generates 5-8 tonnes of CO2 per tonne.
Importantly, steel is fully recyclable and can be reused repeatedly within the material cycle.
Advancements in technology have also made it possible to produce more sustainable “green” steel, which can be adopted across various industries. According to Guido Kerkhoff, chief executive officer at Klöckner & Co SE, using green steel only marginally increases the cost of the final product.
Notably, for the automotive industry, the use of green steel products would only push the price of a car up by around 0.7%, and by around 3.6% for home appliances. For onshore and offshore wind towers, the costs would rise by 3.4% and by 5.5% respectively.
Steel capacity far exceeds demand globally. In 2024, it was estimated at more than 600 million tpy by the Organisation for Economic Co-operation & Development (OECD), while in 2025-27 it is likely to increase further when new plants come online.
According to the OECD, the nominal crude steelmaking capacity in Europe is well in excess of 200 million tpy, but actual output volumes have been lagging far behind that in recent years.
The EU’s crude steel production in 2024 reached 129.49 million tonnes, a 2.6% increase compared with 2023. But it was still one of the lowest historical levels.
And several market participants told Fastmarkets on the event sidelines that this tendency was likely to persist in the years to come.
“Steelmaking capacity massively [outweighs] actual production [in Europe and] is representative of what needs to be done [more generally] – shutting down redundant capacity,” a trading source told Fastmarkets.
Apparent steel consumption has also been falling sharply – by around 15 million tpy in the past 6-8 years – to just 127 million tonnes in 2024, Marcegaglia noted in his presentation.
At the same time, the European steel sector is grappling with surging production costs, and a flood of low-cost imports from Asia.
Imports’ share of domestic steel consumption in Europe remained quite high – it was estimated to be around 25-30% for hot-rolled coil (HRC) in 2024, sources told Fastmarkets.
The existing EU steel safeguarding measures have been in place since 2018, intended to protect EU steelmakers from a potential surge in imports. The current measures were set to run until June 30, 2026.
In the third quarter of 2025, the Commission is expected propose long-term measures based on tariff rate quotas, replacing the steel safeguards as of July 1, 2026, providing an equivalent level of protection against negative trade-related effects caused by global overcapacities.
Maret sources said that new measures would probably be product-based, not country-based.
Axel Eggert, director general of European steel industry association Eurofer, said that the new highly effective steel trade measures should be applied to all countries, regardless of market orientation or development status, and should cover all basic products.
In addition, Eurofer asked for an increase in the above-quota tariff rate for imports to 50% – it was 25% in the current steel safeguard measures.
Existing steel safeguard measures will run until June 30, 2026, and “there is no review of the current safeguards planned,” Eggert said.
In 2024, the EU imported 9.7 million tonnes of HRC, up from 9.24 million tonnes in 2023, according to Global Trade Tracker (GTT) statistics.
With traditional suppliers such as Egypt, Vietnam and Japan facing trade limitations in 2025, new suppliers such as Malaysia and Indonesia were seen to capture larger market shares.
Earlier this year, market sources noted that the sharp increase in HRC deliveries, notably from Indonesia, might result in either an anti-dumping probe or their inclusion in the “other countries” quota, with the latter appearing more likely.
For example, in January-April 2025, Indonesia supplied 213,152 tonnes of HRC to the EU, compared with just 64,213 tonnes during the same period in 2024. Total HRC deliveries from Indonesia to the EU were 250,908 tonnes in 2024.
But because no review is planned, this issue will probably remain unresolved in the near term.
On July 2, The European Commission launched a public consultation on CBAM, seeking to refine it and address potential loopholes.
Key aspects of the consultation include:
Effectively, CBAM will come into force on January 1, but the fiscal implications will only become effective in May 2027.
In the first year of CBAM, in 2026, importers will have to pay for only 2.5% of embedded emissions, but this rate will gradually increase to 100% of grey emissions by 2034. Therefore, the costs of handling imports will dramatically change next year, and buyers should start to prepare now.
Extras will have to be paid for imported steel with higher emissions, bringing additional costs of around €56 per tonne.
“Assuming this benchmark and imported steel with embedded CO2 emissions of 2.1 tonnes, and a current EUA price of €76, CBAM is estimated to cost an additional €56 per tonne of steel,” Julian Verden, managing director for Europe at steel services provider Stemcor, said.
Maret sources expected that CBAM implementation in 2026 will support a rebound in domestic steel prices in Europe.
European HRC prices have been under pressure recently due to poor demand, recently hitting new lows.
Fastmarkets’ calculation of the daily steel HRC index, domestic, exw Northern Europe, was €550.00 per tonne on July 4, down from €565.63 per tonne on June 27.
This was the lowest values of the index since October 28, 2024, according to Fastmarkets’ database.
“Recent trade data and pricing indicate that the market expects a recovery in the second half of 2025 due to numerous factors, with CBAM seen as especially inflationary,” Verden said.
Eurofer and other market participants have lobbied the European Commission to consider new protectionist measures and an acceleration of the CBAM program to support the market. But it remains to be seen how governmental bodies will react to such requests.
A communication issued by the Commission on July 2 read: “The Commission intends to make a dedicated proposal using the revenues generated by CBAM which will be extended to support production at risk of carbon leakage. This would allow the affected producers to be compensated proportionally to the phasing out of the free allowances subject to deliverables on long term decarbonisation…
“This solution aims to ensure equal treatment for CBAM goods,” it added, “whether produced and sold in the EU, exported from the EU to third countries or imported into the EU to maintain [World Trade Organization] compatibility.”
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.