Austria supports machine learning research at steelmakers
Johannes-Keppler-Universität Linz is launching a research series on machine learning and signal processing in steelmaking, together with voestalpine Stahl, Kallanish notes.
The project at the University’s Christian Doppler Laboratory for Signal Processing and Machine Learning in the Steel Industry (CD) institute will run until 2032. It has been endowed with €2.7 million ($3.2m) by Austria’s Federal Ministry of Economy, Energy and Tourism.
The laboratory will work on the development of theoretical principles and algorithms to improve signal processing for monitoring steel manufacturing processes for the next few years.
“Production processes – such as those at voestalpine Stahl GmbH – are monitored by sensors whose signals are processed by specialised algorithms,” says project head Oliver Lang. He explains there are various kinds of signals. “One type of signal that occurs frequently are so-called approximate periodic signals,” he identifies as one example. “There has been very little research on these signals in the past and we only have very few algorithms that are able to process them.”
The reason these occur rather often at strip mills is because of the many continuous processes involved, Kallanish understands. “The rotations and oscillations create these almost periodic signals, but they also cause a lot of critical interfering signals,” Lang concludes.
UK’s TRA removes Vietnam’s rebar quota exemption
The UK’s Trade Remedies Authority (TRA) has removed Vietnam’s exemption from the tariff-rate quota (TRQ) for rebar imports following a review, Kallanish learns from a published government notice.
The category 13 steel products are defined by commodity codes 72142000 and 72149910. The review was initiated on 10 November 2025 after an application was lodged by UK steel producer 7 STEEL UK on the grounds of a substantial change in circumstances. The application indicated that imports from Vietnam of rebar may have surpassed the threshold for exceptions for developing countries.
According to UK regulations, imports from developing country members of the World Trade Organisation (WTO) that account for 3% or less of total imports into the UK should be exempt from TRQs.
The period of investigation (POI) for the review to assess the change in circumstances was 1 October 2024 to 30 September 2025. It found Vietnam had shipped 21,184 tonnes during this period, accounting for 5.535% of imports. The representative period for assessing traditional trade flows was 2017 to 2019.
The TRA recommended to the Secretary of State of Business and Trade that the TRQ should be altered so that rebar imports from Vietnam are no longer excepted from the application of the safeguard measure, and should now have access to the residual quota.
The updated tariff-rate quota applies from 1 January 2026 to 30 June 2026. The residual quota will have 23,514t available for the current quarter, with the 20% cap for any individual exporting country set at 4,703t.
The update also confirms that Ukraine continues to be suspended from the safeguarding measure.
Author: Carrie Bone UK
10 end-user associations oppose new EU steel quotas
European steel end-user associations have expressed concerns regarding the negative impact the proposed tougher alternative to safeguard measures will have on the EU’s downstream manufacturing industries, according to a joint statement released on 6 January.
The statement was signed by 10 associations, including European Automobile Manufacturers’ Association (ACEA), Home Appliance Europe Association (APPLIA), Metal Packaging Europe Association and the Committee for European Construction Equipment (CECIMO).
The European Commission released its official proposals for the replacement of the EU’s steel protection framework on 7 October last year, detailing extensive cuts variable across product category volumes – detailing the CN code categorization of steel products and their respective allocation of the overall quota volume of 18,345,922 tons – a total reduction of 47%. And the tariff-rated quotas were proposed at 50%, compared to safeguard duties currently in place of 25%.
The new measures are expected to come into effect in July 2026, after the expiry of the current safeguard system.
While the associations acknowledge that certain protectionism in needed to tackle the effects of global overcapacity and to secure a level playing field, they strongly oppose the proposed parameters of the measures and believe that the Commission might “go too far in ring-fencing the European market.”
The significant reduction of the quota volume, combined with the doubling of tariff-rated duties to 50% means that more imports will fall outside the allocated quotas and end-users will have to “shoulder between 5 and 9 billion Euros a year in extra tariff costs,” according to the associations, assuming import volumes similar to those in 2024.
The groups estimate the resultant increase in steel prices could be far higher than the 3.25% average forecast by the European Commission. Price increases could reach up to 30% in certain product categories, hitting both importers and companies that rely on exports of finished goods from the EU, they warned.
And the introduction of a “melt-and-pour” rule will further increase the administrative burden on smaller companies. “Obtaining origin information for low-value consignments will be practically impossible. Such a burdensome rule needs to be implemented in a much more careful and practical way and phased in within realistic timelines,” the statement said.
Under the proposed system, the specialised, high-quality steel imports needed for complex industrial applications will be significantly harder. Such products are often manufactured only by a handful of exporters globally and there is no sufficient supply from within the EU.
In addition, the effects of the Carbon Border Adjustment Mechanism (CBAM) and the phaseout of free EU ETS (Emissions Trading System allowances) will drive costs up for both imported and domestic steel and it will have a cumulative impact on the competitiveness of European downstream industries.
European buyers of imported steel have already started to look for domestic alternatives to imports due to the effects of CBAM and have been buying imports via big traders on a DDP basis instead of CFR, paying higher prices to protect themselves from risks of paying higher CBAM duties.
EU steel market starts 2026 on a cautious note
In the first days of the new year, the European steel market is showing a calm picture, marked by low trading activity and limited price movements as the holiday slowdown continues to weigh on market dynamics.
While underlying demand remains weak, market participants are increasingly focused on forward-looking expectations, regulation-driven cost risks, and supply-side developments. Although selective upward price tests are being observed across several segments, these movements are largely driven by cost pressures and risk perceptions rather than by a genuine recovery in end-user demand.
Recent production and investment moves indicate that restructuring across the European steel sector is progressing in a strategic rather than uniform manner. ArcelorMittal’s decision to permanently shut down one of its sinter plants in Gijón, Spain, along with its move to divest the Hunedoara plant in Romania to UMB Group, highlights the ongoing exit from high-cost and carbon-intensive assets. By contrast, Liberty Steel has restarted production at its Dalzell plate mill in Scotland under a government-backed contract, enabling a limited recovery in capacity. In Italy, uncertainty continues to surround the future of Acciaierie d’Italia’s assets, which have long been affected by financial and operational challenges.
In early January, flat steel prices across Europe remain broadly stable, while producers are cautiously testing higher price levels. In Germany, hot-rolled coil (HRC) prices are reported at approximately €620–630/t ex-works, cold-rolled coil (CRC) at €720–725/t, and hot-dip galvanized (HDG) at €735–740/t. In Italy, HRC is trading at €615–625/t, CRC at €720–725/t, and HDG at €725–735/t, while in Spain HRC offers are heard at €630–650/t ex-works.
Despite these marginal increases compared with the previous month, price movements continue to be driven primarily by expectations linked to energy costs, carbon-related expenses, and the evolving trade regime rather than by a recovery in physical demand. Buyers view current price increases not as the start of a sustained rebound, but as an early reflection of anticipated cost risks. Trading volumes remain subdued, and the market continues to see upward price testing. Market sources indicate that one of Europe’s leading producers has circulated HRC offers at around €660/t.
A large share of market participants expects inventories to decline during January. While some buyers had partially rebuilt stocks ahead of CBAM implementation, many remain cautious in committing to new purchases due to uncertainty surrounding regulatory implementation. The prevailing strategy is to closely monitor market direction rather than increase short-term inventory exposure. Trading activity remains limited following the year-end holiday period; however, clearer production planning and greater regulatory visibility in January are expected to translate into more pronounced price dynamics in the coming weeks.
As CBAM begins to generate direct financial obligations from 2026 onward, the structure of price competition in steel and metals trade is undergoing a fundamental shift. Competition is increasingly expected to be shaped not only by product specifications and logistics costs, but also by production methods and the availability of verifiable emissions data. Even products with identical technical specifications may generate materially different cost structures depending on the carbon intensity of the supplier. With CBAM certificate prices indexed to the EU carbon market, companies are being forced to reassess their cost bases, while the mechanism is becoming a decisive factor influencing procurement strategies, supplier selection, and long-term contracting structures.
According to EUROFER’s Economic and Steel Market Outlook 2025–2026 (Fourth Quarter) report, demand prospects point to a limited but fragile recovery in 2026. Apparent steel consumption in Europe is projected to increase by approximately 3%, conditional on a recovery in industrial production and an easing of global geopolitical uncertainties. Should these conditions fail to materialize, consumption risks remaining below pre-pandemic levels.
EUROFER also highlights that elevated energy costs and global economic uncertainty continue to exert pressure on the sector. Risks stemming from US trade policies are expected to remain a key factor influencing European demand and trade flows. Against this backdrop, the market is likely to maintain a cautious stance in the first quarter of 2026, with only a gradual and limited recovery expected in the later part of the year. This outlook confirms that, despite modest upward price testing, the market has yet to establish a strong and sustainable demand base.
Looking ahead, the European steel market appears to be entering a period of gradual rebalancing rather than a rapid recovery. As regulatory costs become increasingly visible, producers are adopting more selective approaches to capacity and investment decisions. On the demand side, the pace and scale of any recovery remain uncertain, reinforcing a cautious stance among buyers. Market direction in the coming months will therefore be shaped jointly by trends in energy costs, the practical implementation of carbon obligations, the impact of trade measures, and the trajectory of industrial output.
Tighter EU steel safeguards degrade competitiveness: downstream groups
The European Steel Using Industries, a group of lobby organisations representing manufacturers of goods ranging from cars and home appliances to agricultural machinery, has warned that the European Commission’s proposal to extend and tighten safeguards on steel imports risks undermining the competitiveness of Europe’s downstream industries, Kallanish notes from a joint press statement.
While supporting the objective of addressing global overcapacity and ensuring a level playing field for European steelmakers, the associations argue that the parameters proposed would excessively ring-fence the EU market and fail to strike a fair balance between steel producers and users. They caution that the proposal would almost halve overall import quota volumes while doubling the out-of-quota tariff to 50%, potentially imposing an additional €5-9 billion/year in tariff costs on downstream industries, assuming import volumes remain at 2024 levels.
The commission estimates an average 3.25% rise in EU steel prices under the proposal, but the associations say this is a conservative assumption, noting that price increases of up to 30% could materialise in certain product categories. Such increases would hit not only importers but also companies reliant on EU-produced steel, weakening both European and international competitiveness.
Concerns are raised over the planned introduction of a “melt-and-pour” rule, which the associations say would significantly increase administrative burdens, particularly for SMEs. They warn that tracing origin for low-value consignments would be practically unworkable and argue that any such requirement should be implemented more cautiously and phased in over realistic timelines.
The associations add that tighter safeguards would make it harder to source specialised, high-quality steel inputs required for complex industrial applications, many of which are produced by only a limited number of suppliers globally and not in sufficient volumes within Europe.
They stress that these effects would compound the impact of other policy measures, including the carbon border adjustment mechanism and the phase-out of free ETS allowances, further increasing steel costs across the value chain. The proposal would affect close EU trade partners that do not contribute to global overcapacity but instead supply high-quality, sustainable and specialised steel to integrated EU value chains.
Switzerland is cited as an example of a partner that should be excluded from the scope of the measure.
If adopted in its current form, the proposal would have a negative impact on Europe’s steel-using industries, the associations conclude. They urge EU policymakers to pursue a more balanced approach that adequately reflects the concerns of downstream manufacturers alongside the interests of European steel producers.
The statement is jointly signed by European Automobile Manufacturers’ Association, APPLiA (Home Appliance Europe), Committee for European Construction Equipment, European Association of the Machine Tool Industries and Related Manufacturing Technologies, European Taps and Valves Association, European Agricultural Machinery Association, European Construction Industry Federation, Metal Packaging Europe, Europe’s Technology Industries group known as Orgalim, and Pneurop, which is the European association representing manufacturers of compressors, vacuum pumps, pneumatic tools and related equipment.
European domestic HRC market still sleepy after holidays; upbeat mood palpable
A few sources said there had not been any price changes announced since mid-December and estimated workable levels at €630 ($738.22) per tonne ex-works.
This compares with official offers from Northern European mills for February/March-delivery HRC heard at €630-670 per tonne ex-works or delivered before the holidays.
“Today people are telling me the same stories and numbers as mid-December. Some more deciding managers will return by mid or end of this week. Presently people are waiting for impulse, but prices are expected to increase,” one trader told Fastmarkets.
Implementation of the Carbon Border Adjustment Mechanism (CBAM), an environmental policy tool for fair pricing of carbon emissions embedded in steel goods imported to the EU from January 1, will increase the cost of imported steel products, particularly HRC, which will help domestic producers strengthen their positions.
Fastmarkets’ daily steel HRC index domestic, ex-works Northern Europe was €630 per tonne on Monday, up by €2.50 per tonne since January 2.
The index was up by €2.50 per tonne week on week and by €7.50 per tonne month on month.
The Italian market was quiet, with participants expected to return on January 7. No fresh input was received on January 5.
The latest buyer estimates of workable prices came in at €610-620 per tonne ex-works before Christmas.
Offers of February-delivery HRC were heard at €610-640 per tonne ex-works, depending on supplier.
Fastmarkets’ daily steel HRC index domestic, ex-works Italy was calculated at €623.12 per tonne on Monday, stable from January 2.
The index was stable week on week and up by €9.79 per tonne month on month.
Global green steel markets in 2026: regulation, costs and regional divergence
But 2026 is shaping up to be the first year when green steel ambitions meet a transformed policy environment and an unforgiving market reality. The introduction of the Carbon Border Adjustment Mechanism (CBAM) in January 2026 in the EU is expected to be a watershed moment – one that forces clearer definitions, shifts cost structures, and begins to separate early winners from laggards.
While Europe is pushed by regulation, Asia is driven by cost and technology pragmatism, and the Middle East positions itself as a strategic supplier of ultra-low-emissions steel and raw materials. The US, meanwhile, enters a period of uncertainty as the new administration signals a shift away from federal green-industry goals, creating a more fragmented landscape where state-level incentives and corporate demand – rather than national policy – will shape the trajectory of low-carbon steel. Together, these regions will define the competitive landscape for green steel over the next several years.
Fastmarkets has done a forward-looking preview of what to expect in 2026 for the green steel market globally, along with the key challenges and opportunities as some regions move from green steel storytelling to measurable decarbonization.
Europe: Definitions, Regulations and Cost Pressure
For Europe, the ambiguity around green steel will become increasingly difficult to sustain. The introduction of the CBAM will force producers and importers to quantify emissions with unprecedented precision.
With CBAM payments becoming financially material, the market can no longer operate on loosely defined green branding or mass-balance accounting. Instead, Europe will be pushed toward a more consistent emissions-intensity threshold, covering Scope 1, 2 and, increasingly, Scope 3. This will bring Europe closer to emerging frameworks abroad, including India’s 2024 star-rating system and the rules emerging in different regions for “clean” materials.
In this context, the need for a harmonized certification and “green steel” label that aims to bring transparency and credibility to the market becomes crucial. Without credible supply-side labeling and traceability, Europe risks undermining trust in green steel – which could discourage procurement and investment.
Initiatives for certification standards, like the one led by Low Emission Steel Standard (LESS) or Responsible Steel therefore become particularly relevant.
If LESS or a similar standard gains broad acceptance in Europe – including among producers, buyers, and regulators – 2026 could mark the birth of credible “lead markets” for low-emission steel. Large institutional buyers (automakers, construction firms etc.) will demand certified emissions data, not marketing claims. That could make low-emission steel the new baseline for “responsible sourcing.”
So far, European steelmakers have found it challenging to charge premiums for green steel owing to a lack of willingness to pay among buyers and a lack of consumer awareness of green steel.
The lack of common standards, even for the definition of “green steel”, slowed its uptake in the market, sources said.
“There is a lack of awareness [of green steel] from buyers in some regions,” a mill source said. “Sometimes we get ridiculous requests. It is clear they have no idea of what they need.”
Fastmarkets’ methodology defines European green flat steel as “steel produced with Scope 1, 2 or 3 emissions at a maximum of 0.8 tonnes of CO2 per tonne of steel.”
Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, meanwhile, was set at €100-170 ($117-199) per tonne on January 2, unchanged from December 24.
In 2025, green steel premiums for flats have remained relatively stable, fluctuating within a narrow band of roughly €120-180 per tonne. The premium has been showing only modest week-to-week volatility. Despite movements in underlying base steel prices, the green premium itself has not shown major directional shifts and has instead held within the same range throughout the year. This suggests a broadly steady market perception of the green surcharge rather than strong upward or downward pressure in 2025.
Overall, the decarbonization shift in Europe remains quite “painful” for steelmakers, despite state funding.
“Even with strong policy backing and potentially rising demand due to regulatory changes, producing green steel is expensive and difficult to scale-up,” a mill source in Europe said.
Regulatory uncertainty and deteriorating economic conditions have led several European steelmakers to revise their decarbonization strategies, Fastmarkets reported – for example:
Salzgitter delayed implementation of its Salcos green project.
Thyssenkrupp has put a hydrogen tender for its green steel plant on hold due to elevated prices but said it remains committed to the Duisburg site’s green transformation.
SSAB postponed the start date for its Lule green project from the end of 2028 to the end of 2029 because of technical challenges – notably, delays in the modernization of the national power grid that will supply electricity to the facility.
Switching to electric-arc furnaces (EAFs) and EAFs/DRIs implies a steep increase in electricity requirements. SSAB estimated that electricity usage would rise significantly, demanding greater supply of fossil‐free power.
Electricity accounts for less than 4% of the costs in the BF-BOF production route. For EAF mills, electricity can be around 20% of the total, industry sources estimated.
The first wave of DRI/EAF projects has already faced increasing pressure relating to raw materials availability and energy pricing. DR-grade pellet, high-quality scrap, and reliable renewable electricity remain critical constraints for scaling low-carbon output. Europe’s energy transition delays – slow permitting for renewables, elevated electricity costs, and underdeveloped hydrogen infrastructure – will make 2026 a challenging year for many plants seeking full certification and compliance.
In such circumstances, decoupling energy-intensive ironmaking from steelmaking has become an omni-present discussion point.
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.
Despite all the challenges, the opportunity remains real. CBAM phasing in, along with phasing out of free carbon permits under the EU Emissions Trading System (ETS), will give potentially compliant producers a structural price advantage over BF-BOF imports. Combined with a credible low-emission steel standard like LESS or Responsible steel, European producers who secure “clean” raw materials, renewable energy, and transparent emissions accounting could build a strong market position.
As a result, 2026 promises to be a moment of “sorting” for European steel: companies and projects that align early with emissions-based certification and clean energy strategies will gain first-mover advantages; others risk being left behind, exposed to both regulatory costs and eroding market trust.
MENA paradox
The Middle East-North Africa region holds the strongest position among all regions when it comes to low-carbon steel production.
The region’s steelmaking industry, being comparatively recent, is almost 100% represented by EAF-based mills, their CO2 emissions being below one tonne per one tonne of steel produced versus the global average of 1.9 tonnes of CO2 per tonne of steel produced.
On top of that, MENA has abundant gas reserves, and great potential for renewable energy – particularly solar, and the push for the potential of green hydrogen, which would allow cutting of CO2 emissions even further.
Additionally, the region enjoys a favorable geographical position thanks to relatively close access to Europe and Asia as well as reasonably developed port infrastructure.
But despite all these benefits, the region cannot fully enjoy them since the European region – the only one that currently shows interest in steel with a low carbon footprint – mainly needs flat products, whereas MENA is largely concentrated on production of long steel.
“If you go into the data of European imports, they import 38 million-42 million tonnes [per year] roughly and 90% or more of that is flat products. The MENA [region] produces mostly long products, but [Europe] does not need long products,” Rajesh Singh, general manager at United Iron and Steel said during Fastmarkets’ Middle East Iron and Steel Event (MEIS) held in Dubai in November.
And, in 2026, long steel imports into Europe are projected to shrink once the new trade regime cutting foreign steel supply by around 50% comes into force.
Under the new regime, only 844,526 tonnes of rebar and 1.56 million tonnes of wire rod will be able to enter the union free of a 50% duty.
“Thus, we cannot use this good positioning that we have in terms of low emissions,” said Ramy Saleh, chief business development & sustainability officer at El Marakby Steel.
According to Saleh, the MENA region could capitalize on steel sections and sheet piles as well as various downstream products.
Additionally, the region could potentially go downstream once European mills switch to EAF-based production since it is one of the largest DRI producers in the world.
In 2024 the region (excluding Iran) produced 28.55 million tonnes of DRI, according to Worldsteel, while overall steel output was 43.7 million tonnes.
Nevertheless, some of the region’s key producers repeatedly mentioned that it would be better to sell products with high added value rather than raw materials.
China ready to export green steel, but CBAM cost concerns persist
China is advancing its production and export of green steel, with many mills now able to reduce carbon emissions by 30-40% compared with the traditional BF-BOF process, which typically emits 1.8-2.2 tonnes of CO2 per tonne of crude steel.
Several steel producers are already manufacturing products that meet the CBAM carbon emission benchmarks.
For example, HBIS Group has utilized hydrogen metallurgy to produce green steel, exporting its first batch of green steel slabs to European buyers in 2025. Similarly, Baowu Steel supplied green rebar for a low-carbon construction project in Shanghai. Although volumes were modest, industry observers noted that this demonstrates the capability of Chinese mills to produce a range of green steel products in response to market demand.
China also benefits from a substantial supply of green electricity, which supports environmentally friendly steel production, particularly at electric-arc furnace (EAF) mills.
As of the end of 2024, the cumulative installed capacity of new energy power generation in China reached 1.41 billion kilowatts, a year-on-year increase of 33.9%, accounting for 42% of the total installed capacity in the country. In 2024, China’s new energy power generation reached 1.84 trillion kilowatt hours, a year-on-year increase of 25%, according to China’s National Energy Administration.
Furthermore, the Chinese government has finalized the carbon emission allowance allocation plan for the steel sector under the national ETS for 2024-2025, enabling producers to trade carbon credits. This mechanism is expected to promote green steel production by allowing mills to offset a portion of their costs through the sale of surplus carbon quotas.
Nevertheless, concerns persist regarding high CBAM-related expenses. The European Commission sets China’s default emissions value for hot-rolled coil (HRC) under CBAM at 3.187 tonnes of CO2 per tonne, leading to an estimated cost of €145.46 per tonne according to Fastmarkets’ data.
“This cost will undermine the competitiveness of Chinese green steel in the European market, hindering the mass production of the product,” an exporter based in China said.
“The carbon emission benchmarks for Chinese steel products are lower than we previously expected, which could be a challenge for most Chinese steelmakers for now,” a Chinese mill source said.
Higher costs caused by the launch of CBAM in Europe from 2026 will likely constrain trade flows of Chinese steel into the European market in the near term; in the longer-term, this, coupled with the Chinese government’s decarbonization push, is expected to help facilitate the green development of the Chinese steel industry, a second Chinese mill source said.
Fastmarkets’ fortnightly price assessment of flat steel reduced carbon emissions differential, exw China, which calculates the premium for flat-rolled reduced carbon emissions steel over products produced from the traditional blast furnace-based route, came in at 0-500 yuan ($0-71) per tonne on Monday January 5 2026, unchanged since June 20.
The corresponding assessment of flat steel reduced carbon emissions, daily inferred, exw China was 3,260-3,770 yuan per tonne on Monday January 5, with the range moving down by 10-30 yuan from 3,270.00-3,800.00 on December 31.
Decarbonization and the green steel movement lose steam in Trump’s America
When Donald Trump began his second term as President of the United States on January 20 2025, it was clear that his administration’s policies would veer sharply away from his predecessor Joe Biden’s.
Trump had run his campaign on the promise of putting ‘America First’, and the country’s turn away from making climate-conscious policies was a natural consequence of this, one that has put decarbonization and the green steel movement on the back foot.
For example, Trump’s One Big Beautiful Bill Act (OBBBA) made it harder for solar and wind energy projects to qualify for federal tax credits and repealed several Inflation Reduction Act (IRA) incentives such as those for electric vehicles (EVs) and residential energy products.
During his address to the United Nations General Assembly (UNGA) on September 23, Trump dismissed climate change as “the greatest con job ever perpetrated on the world” and a “hoax made up by people with evil intentions.” He also called green energy a “scam” and took aim at wind farms and environmentalists.
“You need strong borders and traditional energy sources if you’re going to be great again,” Trump said during his address. “I worry about Europe; I love the people of Europe. I hate to see it being devastated by energy and immigration,” he added.
It is unsurprising that, in the current political climate, green steel initiatives are not picking up steam.
US steel market participants have often expressed the opinion that steel made in the US is “cleaner” than production methods elsewhere, as more than 70% of production is through electric-arc furnaces (EAFs).
EAF steel production emits lower levels of carbon, while production via blast furnaces, which rely on coal, emits higher CO2 levels.
Fastmarkets’ weekly green steel domestic, differential to US HRC, fob mill was flat at $0 per short ton on Wednesday December 31, unchanged since the differential was launched on May 22, 2024.
Fastmarkets’ carbon threshold is 0.7 tCO2e per one tonne of steel produced. Renewable energy credits and mass balancing can be used for carbon calculation, but carbon-offset credits are explicitly disallowed.
Author: Julia Bolotova, Vlada Novokreshchenova, Jessica Zong, Zihuan Pan, Rijuta Dey
Perfect storm for EU steel: five things to watch in 2026
CBAM rollout to gradually shift trade flows
CBAM is prepared for a full rollout as of January 1, and its introduction is expected to reshape the trade patterns in the European steel market massively – the change was already visible in 2025.
The European Commission has now finalized the benchmark and default emissions values that will determine how much carbon cost importers must pay once CBAM becomes fully operational in January 2026.
These values, especially the default emissions assigned to each exporting country, vary widely and create major cost differences between origins.
Consequently, trade flows are expected to shift for a number of reasons.
Default values are extremely high for some major flat steel and semis suppliers, namely China, India and Indonesia, much higher than in the previously leaked draft from November 2025.
For example, China’s slab default value was raised to 3.167 tCO₂e/t compared with 1.75 tCO₂e/t in November drafts, which translates into roughly €144 per tonne in CBAM charges, making imports far less competitive.
Indian and Indonesian hot-rolled coil could face €200-600 ($234-703) per tonne in CBAM costs, erasing the advantage of low base prices.
Among other suppliers very few, including Brazil saw milder increases, making them “manageable” CBAM-compliant origins and therefore more or less attractive to EU buyers.
Annual mark-ups, specifically 10% in 2026, 20% in 2027 and 30% from 2028, make high-default-value countries even less viable over time unless they can provide verified actual emissions, which many cannot yet do.
Because CBAM cost exposure differs dramatically by origin, buyers will change sourcing strategies to avoid punitive default values and prioritize countries with lower default values and/or verified emissions, or greener production routes, for example scrap- electric-arc furnace (EAF).
So far, to manage unpredictable CBAM costs, European buyers were prioritising import bookings on DDP basis – which at least partially accounted for CBAM costs of imported goods.
For this reason, Fastmarkets launched its DDP price assessment for imported flat steel in November.
Growing protectionism: new trade regime to cut steel imports in 50%
Another groundbreaking change the European steel market will face in 2026 is new trade regime, set to replace existing safeguards measures.
In October 2025, The European Commission has proposed a deep overhaul of steel import safeguards, slashing tariff-free quotas by roughly 47% and imposing a 50% duty on any imports above the new limits, up from the current 25%. Only 18.3 million tonnes of steel would be allowed into the EU duty-free each year, versus much higher current import volumes.
The reform aims to shield EU steelmakers from global overcapacity, restore domestic utilization levels, and return import market shares to pre-crisis norms. It also tightens traceability with a mandatory “melt and pour” origin rule, blocking relabeling or transshipment.
Because actual EU steel demand remains weak while imports have surged by 26.36 million tonne in 2024, which represents 6.4% year-on-year growth, according to Eurofer data. For flat steel market, share of imports in total consumption was estimated by industry sources to have surged to 25%, the new quotas would represent severe cuts for many categories, Fastmarkets reported.
Meanwhile, actual imports was actually much higher than suggested quotas.
The regime is likely to replace current safeguards measures as of July 1 2026, several sources said.
“It’s unlikely that the Commission will do early introduction as of April 1, the regime is too complex, they will need more time,” a buyer in Italy said.
Such reductions are expected to create tightness in key flat steel grades, lift in-quota prices and push buyers toward greater reliance on EU mills, especially because CBAM also raises the cost of imports from high-emission origins, Fastmarkets understands.
Producers welcomed the proposal, while import-dependent industries warn of supply disruptions. The UK — with 80% of its steel exports going to the EU — calls the plan “existentially threatening,” while other third-country exporters anticipate diversion risks.
The proposal still requires approval by Parliament and Council but is expected to take effect mid-2026, when current safeguards expire, sources familiar with the matter told Fastmarkets.
On top of all this, in September, the European Commission imposed anti-dumping duties on imports of certain hot-rolled flat products originating in Egypt, Japan and Vietnam. replacing the provisional duties applied earlier in 2025. The measures targets nearly half of HRC imports into he bloc.
Also in September, The European Commission initiated an anti-dumping investigation targeting cold-rolled flat steel products (CRC) originating in India, Japan, Taiwan, Turkey and Vietnam. The investigation covers around 70% of all CRC imports into the EU.
Among the latest updates, on December 3, the European Commission presented a new registration process for CRC products from India, Japan, Taiwan, Turkey and Vietnam. Under the new rule, duties would be applied retroactively on imports from those jurisdictions that were found to have been dumped into the EU market between July 1 2024, and June 30 2025.
CBAM costs uncertainty, sweeping quota cuts under new regime, and a widening web of anti-dumping actions — have made steel imports into the EU “very challenging,” market participants said. By mid-2026, buyers will be navigating a radically altered landscape in which access to third-country steel is not only more expensive, but also more restricted, administratively complex and very cost-sensitive.
But while import restrictions efforts are aimed at helping local producers to increase their market share, the question arises as to whether they will be willing to increase capacity utilization rate from current 70% roughly given that this would entail higher carbon emissions for which they will have to pay.
Costs of EU carbon permits have been hovering at around €80-85 per tonne in December 2025, but it is expected to go above €100 per tonne in 2026, sources said
“[A European steelmaker from Central Europe] is now operating two blast furnaces out of three and they do not have more free CO2 allowances to make the third blast furnace operational. If they do so they will have to pay additional €160 per tonne,” a European flat steel buyer provided as an example.
Positive policy steps towards affordable energy in Europe, but data centre competition ahead
Lowering energy costs in Europe and supporting the region’s green energy transition will remain key objectives for the steel industry in 2026, with the European Commission expected to publish its official EU Electrification Action Plan (EAP) in the first quarter of 2026.
In a position paper released on December 8, the European Steel Association (Eurofer) called the EAP an important opportunity to restore affordable electricity, support decarbonization and strengthen international competitiveness. With European industrial sectors including steel facing much higher electricity costs and energy spending than international competitors, Eurofer welcomed the call to action and urged policies to improve access to long-term clean power contracts, maintain short-term support measures and boost flexibility and coordination across the grid.
According to Eurofer, the EU steel industry consumes around 75 terawatt hours (TWh) of electricity annually and its planned low-carbon projects will require roughly 165 TWh of fossil-free electricity and about 2.1 million tonnes of green hydrogen per year by 2030 to decarbonize production. Despite this, steel output has fallen significantly in recent years, with production dropping by around 34 million tonnes between 2018 and 2023 amid weak demand, global overcapacity and persistently high energy costs that have undermined competitiveness.
Europe has also introduced the European Grids Package, unveiled on 10 December 2025, to modernize and expand electricity grid infrastructure and better integrate renewable energy to support electrification and lower costs.
However, the European Commission also reported recently in November that data centers are an “energy-hungry challenge” — using an estimated 70 TWh in 2024 — which could add competition for limited clean power resources alongside energy-intensive sectors such as steel. The rapid expansion of data center construction in Europe however, will also support steel demand.
While Eurofer welcomed the energy policy developments, some industry participants have cautioned that improvements may take time to meaningfully ease the cost pressures facing European steel producers, with energy cost challenges described as long-standing and not quickly resolved.
Real demand challenges: no booming recovery expected in 2026
The outlook for European steel demand remains mixed despite some positive projections for apparent steel consumption in 2026, with the market bracing for major industry changes in the new year, including the arrival of highly anticipated trade regulations – CBAM and new trade regime, set to replace current safeguards system next year.
In early December, the European steel industry association Eurofer said in its fourth quarter market outlook that apparent steel consumption is projected to grow only modestly by 3% in 2026, leaving it well below the pre-pandemic levels Eurofer also confirmed its earlier projection for 2025 of a 0.2% drop in apparent steel consumption to 128 million tonnes.
However, despite expectations of modest growth in steel consumption, market participants remained uncertain about how real demand will develop in the new year, sources told Fastmarkets.
“There are no strong signals that would tell us there will be booming demand for steel in 2026. At least in the first half of the year,” a buyer in Germany said.
Sources pointed out that recent price increases achieved or announced in the European flat steel market are driven entirely by shifting trade regulations – notably CBAM and new trade regime, while real demand remained sluggish.
“[Flat steel] prices are moving slowly upward – however only due to fear of uncertain costs of CBAM and new safeguards and are not driven by demand,” a buyer source in Germany said.
An Italy-based buyer said, “there are very few companies who can manage CBAM financially – therefore, import activities almost stalled recently. Reliance on domestic steel next year will be much bigger, imports is becoming unmanageable. I see a wait-and-see approach from both sides of the market – stocks are higher than usual, but there is also low demand.”
The buyer added that there are no projections for long-term business.
In October, shifting regulatory frameworks, notably CBAM and the introduction of new steel safeguards, have given European flat steel prices a boost, despite limited real demand.
On December 17, the European Commission has published a package of CBAM documents on the web portal of its Directorate-General for Taxation and Customs Union (DG TAXUD), Fastmarkets reported.
Lower benchmarks and higher default emissions values for a number of origins were expected to push import prices sharply up, with some buyers already prioritizing booking flats domestic, claiming CBAM compliance costs are “unbearable.”
“Mills are trying to push for higher prices, but the market has to accept the prices”, a seller source in Northern Europe told Fastmarkets, adding that the import market remains subdued with the approach of CBAM.
However, according to a number of industry sources, the market is slowly warming up to the new levels, with a growing number of customers “accepting higher prices” as they prepare for the potential shift in market flows expected from 2026.
Fastmarkets’ daily steel hot-rolled coil index domestic, exw Northern Europe was €627.50 on January 2, unchanged since December 24 due to winter holidays trading lull.
The index was unchanged week on week, but was up by €9.17 per tonne month on month.
Decarbonization pains: steelmakers revise DRI plans
Regulatory uncertainty and deteriorating economic conditions have led several European steelmakers to revise their decarbonization strategies, with some companies cancelling on plans to build DRI towers.
Over the past few years, major European steelmakers have announced ambitious decarbonization strategies and developed their own green steel brands.
Most steelmakers use the same approach, aiming to replace Blast Furnace-Basic Oxygen Furnace (BF-BOF) capacity with electric-arc furnaces (EAF) and hydrogen-fuelled direct reduced iron (DRI) modules.
Green hydrogen – hydrogen that is produced using renewable energy – is a vital element required if the DRI-EAF route is to become a net-zero emitter.
But producing green hydrogen requires significant investment and massive increases in renewable energy generation.
Electricity in Europe is still far more expensive than in many other parts of the world. Industrial users often pay over €100 per megawatt hour (MWh), compared with just €30-€50 per MWh in countries like the US and China. This wide gap puts energy-intensive sectors, such as steel production, at a serious competitive disadvantage.
Sources in the European steel market familiar with the matter agreed that using hydrogen to feed DRI plants is currently too expensive to be competitive. Hydrogen prices in Europe are currently reported by industry sources at around €5-8 per kg.
Estimated hydrogen requirements to fuel a single 2 million tonne per year DRI module are around 140,000-150,000 tpy, which, with current hydrogen prices, will make iron production costs “astronomical,” a mill source in Europe said.
These headwinds have made European steelmakers rethink their decarbonization strategies over the past two years.
Leading European steelmaker ArcelorMittal recently scrapped plans to build DRI modules in Germany, despite also being provided with government funding. It is now only committed to build EAFs, it said, due to market fundamentals in Europe being unfavorable to green investments.
In March, Germany’s largest steelmaker, thyssenkrupp, put a tender for a hydrogen-based green steel plant on hold due to elevated prices.
In September 2025, Sazgitter announced a delaying of its final investment decision on the later stages of the SALCOS project.
In March, the European Commission presented its Steel and Metals Action Plan to support the struggling industry, but it remains to be seen how the plan will be implemented and what results it will bring.
So far, the European Commission has concentrated on tightening trade policy to shield the domestic market from unfairly priced imports as well as CBAM rollout.
The steel industry remains a cornerstone of Europe’s industrial economy. According to Commission data, the sector spans around 500 production sites across 22 member states, contributes roughly €80 billion to EU GDP, and supports more than 2.5 million jobs across the value chain.
Vlada Novokreshchenova in Dnipro contributed to this report
Lemvigh-Müller expands presence in Denmark with acquisition of steel wholesaler Brdr. Kier
Lemvigh-Müller, Denmark’s leading wholesaler of steel and industrial products, has announced the acquisition of the operational activities and employees of the regional wholesaler Brdr. Kier, further strengthening its position in Central and Eastern Jutland.
Founded over a century ago, Brdr. Kier has built a strong reputation as a local supplier of steel, plumbing, and VA solutions to contractors, installers, and industrial customers across the region. Lemvigh-Müller aims to build on this local legacy by enhancing product expertise, customer advice, and service offerings.
“With this acquisition, we will strengthen the close cooperation with our customers and partners and continue to offer expert advice in both the Industry and Installation segments,” said Christian Søgaard-Christensen, CEO of Lemvigh-Müller. “We complement each other well, especially in technical capabilities and customer relationships, and I am confident that our combined strengths will enhance our competitiveness.”
Through the acquisition, Lemvigh-Müller also expands its physical footprint, gaining retail locations in Aarhus North and Skanderborg and a steel warehouse in Hasselager. Customers of Brdr. Kier will now benefit from access to Lemvigh-Müller’s extensive catalogue of over 550,000 product references and a densified distribution network throughout Denmark.
The transaction is currently subject to approval by competition authorities and is expected to be completed in the coming months.
Source: lemu.dk
SMS completes acquisition of Metso’s Ferrous technologies
SMS says it has completed the acquisition of Metso’s Ferrous business, which includes the travelling grate pelletising and “Circored” direct reduction processes.
The deal was announced last summer, and the transaction was projected to be completed for an undisclosed sum in the first quarter of 2026.
SMS is taking over selected Metso business units and technologies located in Germany, India, China and Australia, The German-based group will strengthen its solutions in the field of “green iron”. This approach combines fluidised-bed reduction from Circored with SMS group’s established Open Bath Furnace technology, forming a two-stage reduction process, the buyer explains.
By integrating agglomeration technologies for travelling grate pelletising, sintering and CFB (Circulating Fluid Bed) calcination, SMS says it is broadening its upstream process in the direct reduction route.
Iron ore agglomeration is essential for producing the feedstock required by shaft furnace direct reduction processes as well as conventional ironmaking, SMS explains. It notes that customers will have a single source partner for end to end solutions – from raw material processing to finished product systems.