European steel distribution sector stable but structurally weaker: Assofermet Acciai president
The European steel distribution sector is navigating a stabilized but structurally weaker market, with downstream demand running 10%-15% below historical levels, according to Tommaso Sandrini, President of Assofermet Acciai, the association of Italian steel service centers.
Speaking to S&P Global Energy on the sidelines of a Eurometal event held in Milan Feb. 26, Sandrini — who is also a board member of Eurometal and CEO of Italy-based metal product manufacturer and distributor San Polo Lamiere — said consumption volumes had held steady compared with 2024 but remained significantly lower than in 2020.
“We’re not seeing any particular changes — just a repetition of consumption volumes, with some threats in specific sectors, first and foremost automotive, which I see in very bad shape,” he said.
In particular, Sandrini said that, of the major users of steel, the automotive sector was the one struggling most, with European players suffering from an inadequate approach to the shift toward electric vehicles, with no clear resolution to the incompatibility between sustainability targets and industrial survival.
Policy uncertainty looms
On the supply side, Sandrini said 2025 marked a sharp break from two decades of free trade, with protectionist measures potentially justified by unfair competition, particularly China’s subsidy system. However, he strongly criticized the implementation of the EU’s Carbon Border Adjustment Mechanism and safeguard measures.
“The main issue is the total lack of clarity,” Sandrini said of CBAM, which applies to imports from January 2026. “We don’t know the rules, the values, the actors involved, or the emission certification methodologies that non-EU steel mills will have to follow.”
Certification bodies are expected to be announced in September, but Sandrini said most imports made from Jan. 1, 2026, will likely fail to obtain certification before well into 2027, forcing them to fall back on default values. “The default values prices are apocalyptic,” he said on the sideline, citing CBAM costs of Eur650/mt ($766/mt) for certain countries as “manipulated data, without solid technical or industrial justification.”
Sandrini said distributors were currently absorbing risks they cannot calculate, creating massive uncertainty. He also criticized the lack of clarity on safeguard quota distribution at the end of February, saying key elements should already be factored into purchasing decisions.
Industrial reckoning
Sandrini described the current situation as “the failure of the European Union’s climate policy,” arguing that the Emissions Trading System lacked a solid foundation and represented a massive burden on European industry. He pointed to halted investments in hydrogen and green steel projects worldwide as evidence that deep decarbonization was incompatible with maintaining European industrial activity.
“Large companies made a mistake over the last 10 years by blindly following regulatory dictates without raising objections,” he said, singling out automotive as “the clearest negative industrial example we have.”
EU faces ‘industrial desertification’ without urgent downstream protection
European policymakers must act swiftly to prevent “industrial desertification,” panelists warned at a EUROMETAL roundtable, emphasizing that current protections for primary steel are insufficient and urging the EU to extend safeguards to downstream manufacturers and steel derivatives.
At the “Are we risking the EU industrial desertification?” roundtable, held by the European steel body as part of its event in Milan, Italy, Feb. 26, speakers also called for a shift from a cost-focused debate to strategies that stimulate demand.
Across Central and Southern Europe, industry representatives said the risk was no longer theoretical, with plant closures and a shift from domestic production to import-and-assemble models becoming more frequent. Concerns focused on gradual erosion, adding that once value chains were relocated, they rarely returned.
The EU’s Carbon Border Adjustment Mechanism, originally conceived as an environmental tool to prevent carbon leakage, is now widely viewed in the steel sector as an increasingly complex trade defense instrument. While intended to level the playing field by pricing carbon on imports, its heavy administrative burden and uneven product coverage risked distorting trade flows rather than stabilizing them, speakers said.
Safeguards and CBAM
Panelists noted that both the EU’s safeguard measures and CBAM have mixed effects. While intended to protect the industry, the new safeguard regime that is reducing quotas and CBAM that adds extra costs to the steel imports are inadvertently opening the door to steel derivative imports from outside Europe.
Franco Felisa, a representative of Electromechanics Synergy Network, highlighted the severe challenges facing European electromechanical companies. “Every day, we are losing a significant part of our market,” Felisa said, attributing the problem to a substantial gap in input costs rather than quality. He pointed out that Chinese raw materials are “at least 50%” cheaper than European equivalents, making it impossible for EU companies to compete with state-subsidized imports.
Piotr Sikorski, President of the Polish Union of Steel Distributors, described the deindustrialization trend as “already visible” in Poland and across Europe. “There is no single week when I don’t have a call telling me another client is out of business,” Sikorski said, warning that fragmented, small downstream companies remain largely unrepresented in policy discussions, leaving a critical blind spot.
Demand Stimulation Needed
Tayfun Iseri, Chairman of YISAD, the Turkish flat steel user, trader, and producer association, challenged the notion that the crisis was solely cost-driven. “We have a demand problem. It’s not only a cost problem,” Iseri said, urging policymakers to focus on boosting demand.
Tommaso Sandrini, head of Assofermet Acciai, the Italian distributors and re-rollers association, warned that delays in addressing steel derivatives could result in irreversible losses. “We don’t have time … In two years, a significant part of downstream manufacturing will never come back,” he said. He cautioned that once production relocates outside Europe, it is unlikely to return, risking not only plant closures but also the erosion of business models, with companies shifting to importing and assembling rather than manufacturing.
Platts, part of S&P Global Energy, assessed Feb. 26 domestic hot-rolled coil in Northern Europe at Eur670/mt ($791/mt) ex-works Ruhr and in Southern Europe at Eur665/mt ex-works Italy, both stable day over day. It assessed imported HRC in Northern Europe at Eur515/mt CIF Antwerp and in Southern Europe at Eur505/mt CIF S. Europe, both unchanged.
EU downstream steel sector faces weak demand amid regulatory uncertainty
The primary challenge facing the European end-user steel industry is weak demand rather than costs, with regulatory uncertainty further exacerbating market fragility, according to participants at a roundtable discussion during the EUROMETAL Southern European Meeting in Milan on Feb. 25, which was attended by Platts, part of S&P Global Energy.
During a session titled ‘The new normal of global economy while Europe loses track,’ panelists emphasized that trade defenses alone would not restore competitiveness unless they are accompanied by initiatives to stimulate consumption and strengthen industrial ecosystems.
The rapid pace at which the steel industry has been required to shift toward decarbonization was also a significant challenge, according to the participants.
Fernando Espada of Tata Steel said that the market “is trying to find a new balance,” noting that the previous momentum for a green deal and decarbonization has shifted.
“The problem with the entire legislation is the pace of it,” Espada said, before drawing a comparison between the adoption of green steel and the slower-than-expected growth of the electric vehicle market in Europe.
“In 2022, everyone thought we had to embrace green policies. But only for the first time, now I have two big projects on the table that are real green steel projects with significant volumes. The transition is taking place, just at a different speed than what the EC (European Commission) wants.”
Manufacturing shift
Emilio Rossi of EconPartners and Oxford Economics said the decline in manufacturing’s share of gross domestic product was not limited to Western economies but was also evident in China, highlighting a broader structural transformation. “Manufacturing and steel depend increasingly on services, such as logistics, financing and funding,” Rossi said, emphasizing that industrial competitiveness now hinges on the strength of supporting service networks.
Espada said steel serves as the “backbone of the economy,” adding that the EC has started to acknowledge that industrial policy “cannot be unilateral” and must align with global developments.
The immediate challenge was weak demand, as buyers have been holding off until there is clarity on revised safeguard measures.
“Once there is clarity, the market will reorganize itself,” he said, noting that suppliers from Taiwan, South Korea and Japan were already preparing competitive offers.
Platts assessed domestic hot-rolled coil in Northern Europe at Eur670/mt ex-works Ruhr on Feb. 26, and in Southern Europe at Eur665/mt ex-works Italy, both stable day over day.
Platts assessed imported HRC in Northern Europe at Eur515/mt CIF Antwerp on Feb. 26, and in Southern Europe at Eur505/mt CIF, both unchanged day over day.
Author: Devbrat Saha, Charles Thompson, Annalisa Villa
Southern Europe steel sector warns of trade shock as CBAM, safeguards converge
Southern Europe’s steel supply chain is moving toward a potential trade shock, as fragile demand coincides with sweeping trade measures and the approaching financial phase of the EU’s Carbon Border Adjustment Mechanism, market participants warned at an event held by EUROMETAL in Milan this week.
The event brought together distributors, traders, mills and policymakers to discuss growing concerns that the regulatory pace is outstripping market preparedness, particularly in import-dependent Italy.
Participants repeatedly stressed that while Europe is seeking a level playing field, the cumulative burden of CBAM, new safeguard measures and administrative complexity risked weakening the broader manufacturing base that the policies aim to protect.
President of Italian steel services body Assofermet, Cinzia Vezzosi, urged in the event’s opening speech that European competitiveness should be prioritized in regulatory changes or risk furthering the ongoing deindustrialization.
“We need rules, but they must be clear and balanced and must meet the number one objective, which is making the continent more competitive,” she said.
CBAM exposure
One of the themes emerging from Milan was the increasing relevance of delivered-duty-paid (DDP) pricing structures, particularly in Southern Europe, where imports account for a larger share of flat steel consumption than in Northwest Europe.
“People had time to prepare and report data last year, but many didn’t, and now they are complaining,” one participant said, referring to CBAM’s transitional reporting phase. “The market needs to adapt quickly. DDP offers are becoming more relevant.”
Early enthusiasm for import trading had faded as the financial implications of CBAM became clearer, several traders said. While shipments for June arrival are still achievable, visibility beyond that remains limited, with both buyers and sellers reluctant to assume liability for future carbon costs.
Market participants expect the European Commission to publish an official list of certifiers later this year, but doubts remain over capacity and consistency, alongside the functioning of the emissions verification and certification processes.
“If you don’t have actual emissions values clearly embedded in pricing, it becomes very tricky,” one distributor said. “A lot of companies are not prepared. The costs will come as a surprise in 2027.”
Regulatory hurdles
Alongside CBAM, the forthcoming safeguard regime dominated discussions. Participants questioned how reduced import volumes would be offset, particularly given the limited idle capacity within the EU, as one trader labeled the incoming trade measures as a “gamechanger” and “more important than CBAM at this stage.”
“Who will make up for the potential loss of 12 million-15 million mt of imports?” one trader asked, referencing struggling operations. “EU mills don’t have that flexibility.”
A key theme across both panels was the apparent lack of regulatory urgency for trade protectionary measures against steel derivatives, or downstream products, as several panelists and attendees warned that the focus on upstream steelmaking risked neglecting downstream industries.
EUROMETAL President Alexander Julius said during his keynote speech that European manufacturing remained uncompetitive on a cost basis to Chinese production, with energy costs and employment costs as two of the largest detractors for European firms. Julius outlined that “steel derivatives are the hidden threat driving European deindustrialization” and that “Europe cannot compete with products that are the same quality but significantly cheaper.” With domestic prices increasing, further import restrictions could see steel derivatives become increasingly cost-competitive,
“We are protecting steel production, but not steel-using sectors,” one speaker said. “There are no quotas on derivatives, so we incentivize imports of finished products.”
Several participants argued that the speed and layering of legislation, spanning trade defense, CBAM, and environmental reporting, had created regulatory fatigue and failed to address a fundamental lack of demand.
“There are hundreds of pages of regulation, but the real problem today is a lack of demand,” one attendee said. “The dynamism in the market right now is administrative.”
Speakers pointed to persistent structural challenges, including high energy costs since the COVID-19 pandemic, infrastructure gaps and elevated tax burdens, particularly in Southern Europe. While aerospace and select high-value manufacturing segments were showing resilience, overall steel demand was described as fragmented and weak.
Coherent industrial policy
Across panels, a recurring message was the need to align environmental objectives with industrial competitiveness.
“Environmental policy must be supported by industrial policy,” Tommaso Sandrini, of Assofermet, said. “When manufacturing is lost, the whole system suffers.”
Some participants expressed frustration with what they perceive as limited responsiveness from Brussels, with industry bodies now preparing coordinated initiatives at both EU and national levels to advocate for clearer, more balanced implementation.
While most agreed that trade measures may temporarily restrict imports, several argued that once clarity emerges, global suppliers are likely to reorganize and re-enter the market competitively.
For now, however, sentiment in Milan suggested a sector caught between structural transition and cyclical demand weakness, with limited visibility on how the balance between protection, decarbonization, and competitiveness will ultimately settle.
“Steel represents a small share of total emissions,” Tommaso said. “We have to be careful we don’t destroy our value chains in the process of trying to fix the problem.”
European Commission seeks clarity after US Supreme Court ruling
The European Commission has called on the US to provide full clarity on the steps it intends to take following the recent ruling by the Supreme Court of the US on reciprocal trade tariffs.
The commission stated that the current situation is not conducive to delivering the “fair, balanced and mutually beneficial” transatlantic trade relationship outlined in the EU-US joint statement of August 2025.
The US president Donald Trump began enforcing a temporary 10 percent global tariff on all imported goods as of February 24, after the US Supreme Court ruled that the previous broad tariffs imposed under emergency powers were unlawful, as SteelOrbis previously reported.
EU insists commitments must be respected
The Commission stressed that EU companies and exporters must receive fair treatment, predictability and legal certainty.
“As the US’ largest trading partner, the EU expects the US to honor its commitments set out in the joint statement – just as the EU stands by its commitments,” the Commission said. In particular, Brussels underlined that EU products must continue to benefit from the most competitive treatment, with no tariff increases beyond the previously agreed ceiling.
The Commission reiterated that tariffs function as taxes, raising costs for businesses and consumers. It warned that unpredictable tariff measures undermine market confidence and disrupt global supply chains.
Officials noted that the EU remains in close contact with the US administration. On February 21, EU Trade Commissioner Maroš Šefčovič held discussions with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.
The EU stated that it will continue working toward lowering tariffs as foreseen in the Joint Statement, with the priority of preserving a stable and predictable transatlantic trading environment. At the same time, the bloc reaffirmed its broader strategy of expanding comprehensive “zero-tariff” trade agreements worldwide and strengthening the open, rules-based global trading system.
EU delays Industrial Accelerator Act amid divisions over “Made in Europe” rules
The European Commission has delayed the presentation of new industrial policy measures under the Industrial Accelerator Act (IAA) by one week due to internal disagreements over proposed local-content requirements, according to Reuters.
Originally scheduled for February 26, the proposal will now be unveiled on March 4, according to the office of Commission Executive Vice President Stéphane Séjourné. The postponement aims to allow additional negotiations among member states and stakeholders.
Debate centers on “Made in Europe” sourcing rules
The Industrial Accelerator Act is expected to introduce minimum local-content thresholds for industrial components used in publicly-funded projects across strategic sectors including batteries, solar energy, wind power and nuclear technologies.
The initiative forms part of the EU’s broader Clean Industrial Deal, which seeks to strengthen Europe’s industrial base and competitiveness amid intensifying global competition, particularly from the US and China.
Concerns over competitiveness and investment impacts
However, EU member states remain divided on the proposal. Countries such as France strongly support stricter “buy European” rules to shield domestic industries from lower-cost imports produced under less stringent environmental standards. Other countries, including Sweden and the Czech Republic, have warned that mandatory local-content rules could raise procurement costs, deter investment and reduce the EU’s global competitiveness.
Meanwhile, industry stakeholders such as automotive manufacturers have called for broader eligibility criteria extending beyond EU and EFTA members to include closely integrated supply-chain partners, notably the United Kingdom and Turkey.
Flacks discusses Marcegaglia, Metinvest, Danieli ADI relaunch support
Flacks Group is in discussions with Italian steelmaker and re-roller Marcegaglia, as well as Metinvest and technology supplier Danieli regarding the industrial plan Flacks intends to implement for Acciaierie d’Italia (ADI) after its acquisition.
This was confirmed to Kallanish by Flacks chairman Michael Flacks, Antonio Marcegaglia and Danieli president Alessandro Brussi.
Completion of the sale may take longer than initially planned due to Italy’s complex and lengthy bureaucratic procedures. Antonio Marcegaglia confirms he is in talks with Flacks but rules out taking an equity stake. “The objective is to support and strengthen the future company’s industrial plan through significant coil offtake in the future,” he says.
The industrial plan will need a technology partner and a large off-taker such as Marcegaglia, while Metinvest would act as the industrial partner supporting the project on raw materials supply. According to Brussi, Danieli and Flacks are currently exchanging views on the future industrial plan and the technological element of the project, although discussions remain at a preliminary stage.
The transaction is progressing, with Flacks’ team of specialists working alongside the Italian government to reach closing. However, given the scale and complexity of the project, which entails a full overhaul of the Taranto steelworks, the process will require time and detailed structuring, Brussi believes. He notes that Danieli is globally recognised for its advanced, low-carbon technologies.
Of the more than €5 billion ($5.89 billion) investment envisaged by Flacks in the former Ilva, around €3 billion is being allocated for new equipment, including three electric arc furnaces and potentially a direct reduced iron plant.
Brussi confirms that Danieli is in contact with Flacks’ technical team, who he describes as experienced professionals with in-depth knowledge of the plant. At this stage, however, discussions are focused on the exchange of technical information and concepts, as the project’s complexity and sizeable financial structure will take time to be defined.
In a recent interview with Kallanish, Flacks noted that while the Italian government has recommended the involvement of an industrial partner, this is not an obligation. He added that he values the advisory input of Metinvest, Marcegaglia and Danieli. Flacks and other sources dismiss the possibility of Italian steelmaker Arvedi becoming a shareholder as some press reports have suggested.
Meanwhile, ADI is restarting blast furnace no.2 at its Taranto steelworks. A scheduled maintenance of BF No.4 will start on 28 February. The special commissioners are expecting BFs no.2 and no.4 to be fully operational by April, with the plant reaching a production capacity of 4 million tonnes/year of steel (see Kallanish passim).
A source close to the company believes Taranto’s output in 2025 was about 2mt or slightly lower, as one BF has always been operational.
Metinvest was unavailable for comment before press deadline.
Alleima partners with German special steels distributor
Alleima has entered a strategic partnership with Stahl Krebs, a specialty steels distributors located in Solingen, Germany.
Stahl Krebs will become a key distributor for Alleima’s premium knife steel portfolio, Kallanish hears from the Swedish stainless steel maker.
Solingen has long been the proverbial centre of German cutlery and knife manufacturing. Founded in 1882, Stahl Krebs has supplied generations of professional knife makers, tool manufacturers, and specialist producers with steels and service.
Alleima highlights Stahl Krebs’ deep understanding of knife-steel performance and its well-established distribution network, which makes it a trusted partner in the German knife-making ecosystem.
Through Stahl Krebs, customers will gain direct access to Alleima’s premium knife steel grades, including 14C28N, as well as Damax, Alleima’s industrial-scale Damascus steel featuring up to 135 layers of martensitic stainless steel.
Distributors slow to capitalise on EU coil hikes
While European coil mills have succeed in exerting gradual price hikes, it is not so clear distributors will be able to pass these on, given the continued low demand environment.
According to a manager at a German distributor, some service centres keep offering bargains to sell from stocks, with offers heard at lower than €670/tonne ($790) for hot rolled coil. “That’s the purchase price for April deliveries; it’s not good, and they really need to stop that,” he tells Kallanish.
The market leader mill recently gave €720/t as the new target for northwestern Europe; at least one other mill gave €700/t, for now. Most transactions these days will be at around €680/t as lead times are stretching towards May.
Strikingly, the market leader defined a higher price for southern Europe, €750, apparently on the grounds of lower availability in the south. Observers point to the stoppage at the mill in Gijón, Spain, which occurred shortly before the latest price hike announcement. Some meanwhile assume production problems are occurring at the mill in Fos-sur-Mer, France, after a stoppage in December.
Despite these discrepancies – north-south and upstream-downstream – mills’ general price direction is upwards. The uptick trend is seeing “hardly any aggressive counterbids to put pressure on the price level,” a Dutch manager finds. Offers at lower levels are being absorbed quickly, which “indicates that the risk of further increases is considered more serious than the risk of a rapid correction,” he argues.
Hydnum Steel secures 500 MW electricity access
The Spanish government has awarded to Hydnum Steel (HS) 500 MW of access capacity to the national electricity grid at the Brazatortas node in the Ciudad Real region, Kallanish notes.
HS is building the first “green” steel mill on the Iberian Peninsula, designed to use fossil-free energy throughout the manufacturing process and to gradually incorporate green hydrogen to substantially reduce CO2 emissions. The project is valued at €1.65 billion ($1.94 billion). The plant is expected to become operational in 2026.
“The award represents a decisive step towards the implementation of the HS plant, which is set to become one of the main industrial projects linked to the ecological transition in Castilla-La Mancha,” according to the Ciudad Real government. “It was vital to guarantee the energy viability of the project, as it ensures the necessary supply for the operation of the future green steelworks and provides certainty for a strategic investment in the province.”
The resolution, published on Wednesday in the country’s Official Gazette (BOE), is part of the first tender for access to the transmission network, through which the Ministry for Ecological Transition and Demographic Challenge has awarded a total of 928 MW.
This includes five major industrial projects in Andalusia, Castilla-La Mancha, Catalonia and Galicia, promoted by Hydnum Steel, Stellantis Spain, Atlantic Copper, the energy company Moeve and industrial gas supplier Messer Ibérica.