Year: 2026

According to the data released by the World Steel Association (worldsteel), global direct reduced iron (DRI) production in the 12 countries accounting for approximately 85 percent of total world DRI production in 2025 amounted to 10.24 million metric tons in January this year, decreasing by 9.9 percent month on month and up by 11.5 percent year on year.

The worldsteel data show that India was the largest DRI producer among the countries surveyed in January this year, with its DRI output amounting to 5.37 million metric tons in the given month. India was followed by Iran, Russia and Egypt in January, with outputs of 2 million mt, 750,000 mt and 603,000 mt, respectively.

During the panel discussion “Rolling in the deep! Are we risking EU industrial desertification?”, held during the EUROMETAL Southern Europe Meeting 2026 on February 26 in Milan, Franco Felisa (ESN, Electromechanics Synergy Network), Tommaso Sandrini (Assofermet, San Polo Lamiere), Tayfun Iseri (YİSAD/Çolakoğlu Metalurji), and Piotr Sikorski (PUDS) debated the growing risk of industrial desertification in Europe.

Franco Felisa opened the debate with a lucid analysis of current market pressures, highlighting how European companies must face raw material and energy costs that are 40-50 percent higher than those of global competitors. He even evoked an extreme proposal that had already circulated in mid-February, namely, a coordinated shutdown of plants for an entire day as an act of protest. “Talking to Brussels is painful,” he noted, adding, “They listen, but then they ask you for numbers, as if they don’t live in the same reality.”

The same risk of industrial desertification is present in the Polish market, as highlighted by Piotr Sikorski, who said it does not only concern large producers. Sikorski explained how the crisis is hitting distribution: “There’s no single week when I don’t have a call from a distributor who is closing their lines or reducing their activity. Deindustrialization is not an idea hanging somewhere over there, but an ongoing process. To stop it, we must actively focus on the areas not represented by the government: distributors, users and small businesses.”

From Poland, the focus shifted to Turkey, one of Europe’s closest partners. Turkish production capacity is around 40 million mt, of which 20-25 million mt are exported to Europe. According to Tayfun Iseri, the market is facing several difficulties, but the biggest problem is the constant concern over costs. He stated, “We’re too focused on the cost problem, when the real problem is that we don’t know how to grow demand.” Regarding the risk of relocation, Iseri emphasized that most Turkish industries are family-owned and very proud of this: they would do everything possible to avoid bankruptcy, but it is unknown how long they can survive.

The environmental paradox

The hottest topic remains climate regulations. Although the goal of decarbonization is shared, the methodology is a subject of criticism. Felisa defined CBAM and safeguards as “accelerators of desertification”. “Both systems work for and against us,” Sikorski added.

In his intervention, Tommaso Sandrini observed that time is running out and that in two years, when downstream products become part of the scope of CBAM, we will have lost downstream sectors that will not return. “There is an increasing level of awareness within the economic community, but we do not see the same level of awareness within political institutions, even less in Brussels,” he commented.

In addition to the complexity and implementation of CBAM, Sandrini also criticized its environmental effectiveness. “European steel accounts for only 0.3 percent of global emissions. We are killing our value chains for a result that is irrelevant on a global level,” he said. The perception among participants at the EUROMETAL event was that CBAM was born as an environmental protection measure, only to become a true trade defense tool. “Nobody is saying anything about the environment right now. This is crazy,” commented Sikorski. Iseri added, “We started from the environment, but I think now it’s turning into a kind of protectionism.”

In essence, the speakers agreed that the time for diplomacy is up, stressing that Europe must protect not only those who produce steel, but especially those who use it. Otherwise, they concluded, the continent’s future will be that of a large buyer of finished products, with a manufacturing industry reduced to a distant memory.

European coil prices jumped in the week to 27 February as extended lead times, solid mill orderbooks, and import deterrents continue to balance the scales of the market in mills’ favour.

Hot-rolled coil (HRC) prices in both North and South Europe climbed by EUR15/t on the week. Market sources reported incrementally higher offers at EUR710-750/t delivered in Northwest Europe, with deals settling at EUR690-700/t delivered, or the ex-works equivalent of EUR660-690/t.

In Italy, trading price indications clustered at a very slight discount between EUR660-680/t ex-works, otherwise operating on similar dynamics as in North Europe.

While the market was fairly unanimous in expecting higher prices in Q1 as compared to 2025 levels due to supply-side drivers like the Carbon Border Adjustment Mechanism (CBAM) and the upcoming redesign of steel import quotas, the lack of recovery in steel consumption is starting to give both sides of the market pause as relates to the sustainability of the current upward trend.

“The price rise is purely due to new policies, while demand is unchanged,” said an Italian trader. “Importing is becoming far more complicated as everyone wants to buy DDP, but we need to price-in risk from the new quotas, and we have no clarity there. It’s clear the quotas will be slashed, but the country-specific allocations are uncertain.”

Distributors were said to have increased their own sales prices to consumers by around EUR20/t, but “are in no hurry to sell,” as described by a German stockholder, due to the upcoming quota cuts and the expectation of higher prices as a result.

A Benelux distributor considered market dynamics as largely unchanged, “except that end-users can more clearly see that further price increases are inevitable – that does make it easier to close sales.”

Cold-rolled and hot-dip galvanized coil (CRC/HDG) prices experienced similar gains as HRC, with dealings breaking above EUR800/t delivered. Domestic buyers remain concerned about the availability of downstream coils on both existing and upcoming import barriers — Brazilian exporters were said to be capitalizing on this dynamic, offering CRC “actively” into Europe at EUR690-720/t DDP Antwerp, due to their non-inclusion in the CRC anti-dumping framework, and competitive default values under CBAM.

A German distributor described CBAM as a “Sword of Damocles” hanging over the market, with default values presenting an existential risk to smaller, more import-dependent operators.

Green Steel

Despite its long anticipation, at the close of this week McCloskey exclusively reported that the EU’s first official green steel definition – the voluntary low carbon steel label – could be at risk due to wider frictions in the drafting of the Industrial Accelerator Act (IAA).

Green steel standardisation via the label was a priority of the European Commission, as stated in its Steel and Metals Action Plan, both for the clarity it could give buyers in securing material with true emissions reductions, and the intention to link the standard to public procurement mandates to stimulate domestic low-carbon markets.

A full abandonment of the low carbon label has not been confirmed, and sources expect that if the IAA does neglect to include the label, the debate would be revisited under the Ecodesign for Sustainable Products Regulation (ESPR), with a steel-related delegated act already scheduled for this year.

Otherwise it was largely business as usual in the green steel segment, though one green steelmaking executive said the low-carbon market is “quietly gaining momentum,” mainly driven by construction. National governments were also said to be giving a “soft push” in their jurisdictions for the increased use of low-carbon steels, and that CBAM has “woken people up to the realisation that decarbonisation is a policy that cannot be ignored.”

The automotive sector was described as one of the only segments still realistically purchasing mass-balanced low-carbon material, due to production history requirements for inclusion in their supply chains.

Green HRC premia were reported on a range of EUR80-100/t for spot buyers of EAF-based material of around 0.7t CO2e/t, while higher premiums were available in deals to project buyers, or material of particularly low CO2 content of around 0.3t CO2e/t.

Weekly European steel coil
EUR/t	Term	27-Feb-26	Change
Weekly Northwest Europe steel coil
Northwest Europe ex-works HRC	EX-WORKS	680.00	15.00
Northwest Europe ex-works CRC	EX-WORKS	780.00	5.00
Northwest Europe ex-works HDG	EX-WORKS	780.00	5.00
Weekly South Europe steel coil
Italy ex-works HRC	EX-WORKS	675.00	10.00
South Europe CIF HRC	CIF	540.00	0.00
Source: McCloskey by OPIS.		© 2026 Dow Jones Energy Limited.

Weekly green steel
EUR/t	Term	27-Feb-26	Change
Green Northwest Europe HRC premium (scopes 1-3 CO2 under 0.8t)		80.00	0.00
Green Northwest Europe ex-works HRC (scopes 1-3)	EX-WORKS	760.00	15.00
Green HRC premium (scopes 1-2 CO2 under 0.5t)		80.00	0.00
Green Northwest Europe ex-works HRC (scopes 1-2)	EX-WORKS	760.00	15.00
Green HRC reduced carbon price (scopes 1-3)		64.32	7.57

Author: Benjamin Steven, Maria Tanatar

The presentation of the EU’s low-carbon steel label – originally to be included as part of the European Commission’s upcoming Industrial Accelerator Act (IAA) – is now uncertain, McCloskey understands from sources close to the drafting process, potentially a casualty of wider frictions on the IAA’s public procurement and support provisions. 

The IAA was originally scheduled for presentation in December last year, but has been postponed multiple times and is currently expected in early March.

Pursuing the Commission’s commitments under last year’s Steel and Metals Action Plan, the IAA was set to introduce the EU’s first official ‘definition’ or ‘standard’ for green steel in the form of a voluntary low-carbon label, which would then be linked to public procurement and support scheme criteria to establish domestic lead markets for low-carbon steel products and support industrial decarbonisation.

However, as demonstrated by the legislation’s significant delay, the drafting process for the IAA has been complicated by disagreements between member states, and even within the EU’s steelmaking lobby as to the scope of both the domestic and low-carbon content requirements, and the form of the voluntary label itself.

The debate on public procurement and support criteria primarily surrounds the inclusion of a “Made in Europe” mandate into the EU framework, forcing purchasers to prioritise domestic content for public projects. While strict “Made in Europe” requirements were introduced and supported by France, other states such as Germany prefer a “Made with Europe” approach, in-line with the original leak of the IAA, which would take a more relaxed approach in ‘extending’ European origin status to a club of EU trading partners.

As of the latest leaked IAA draft, public procurement and support relating to steel products would have to constitute at least 25% low-carbon material, but are not subject to a domestic content mandate or directly defined as a ‘strategic sector’ such to benefit from wider provisions. European steel association Eurofer has called for only steel “melted and poured in the EU” (or EEA countries) to quality for lead market support, else the European Commission “risks financing green steel production from abroad instead of strengthening its own industrial base.’’

As for the low-carbon label, even Europe’s steelmakers are split on the design and implementation of the EU’s first ‘green steel standard’: integrated producers generally support the inclusion of a ‘sliding scale’ mechanism, which would give greener classifications to products the lower their constituent scrap share, whereas secondary steelmakers oppose this formulation, arguing it would be unjust for their cleaner scrap-based material to be considered equivalent to high-polluting blast furnace material, especially if linked to procurement mandates.

The leaked IAA draft and its annexes allude to the inclusion of a sliding scale into the label, adjusting classification thresholds where the steel has a 20-90% scrap share, but does not otherwise define the specific scope or boundaries of the proposed label’s elements.

Secondary electric-arc furnace (EAF) producers predominantly serve the domestic construction sector, which already has sustainability obligations embedded into the Construction Product Regulation (CPR), and so EAF producers and construction consumers fear regulatory overcomplications from the introduction of a competing standard. The original leak of the IAA would also allow third-country producers to gain certification under the proposed label, potentially exposing domestic EAF steelmakers to pressure from international direct-reduced iron-fed EAF production (DRI-EAF). DRI-EAF steels could receive a better classification due to their lesser scrap content, compounded by the comparatively low emissions profile of DRI-based imports.

McCloskey understands from those close to the drafting process that Germany – with a stronger representation of integrated producers – is in favour of the sliding scale, while Italy – with more secondary production – opposed the inclusion of the mechanism. A third position, proposed by France, would reserve the sliding scale for the classification of flat steel, while maintaining existing standards for long steel markets.

According to McCloskey’s sources, the debate surrounding the label may have been one battle too many for the European Commission, now allegedly considering abandoning the standard, to be potentially revisited in the scheduled delegated act for steel products under the Ecodesign for Sustainable Products Regulation (ESPR).

Representatives from non-governmental organisations (NGOs) confirmed that they had heard rumours of the removal, and generally lamented that the label could become a casualty of complications with the content mandates, and overshadow or similarly burden the subsequent implementation of the ESPR.

German steel association WV Stahl declined to comment on the potential removal of the label from the scope of the IAA, instead directing McCloskey to a press statement 27 February calling for “the mandatory linking of sustainability requirements with ‘Made in EU’ criteria” as part of the IAA”, as per “commitments made in the [Steel and Metals Action Plan].”

Giving some insight into the debates guiding the Commission’s Committee on Industry, Research and Energy, WV Stahl “warns against mixing up different political instruments.”

“Regulatory projects that are already advanced—such as the ongoing negotiations on a post-safeguard instrument—should not be used as an argument against binding “Made in EU” criteria within the framework of the IAA,” said the association.

WV Stahl supports limiting “Made in EU” status to member states and European Free Trade Association (EFTA) countries, in-line with Eurofer’s recommendation.

The European Commission was approached for comment, but did not respond by time of publication.

Domestic heavy plate prices inched up in Germany and remained stable in Italy over the week to 27 February, while restocking activity has been muted. 

In Italy, re-rollers continued to aim for EUR750/t ex-works, but such prices were achieved only in deals settled for projects for the material with higher added value. Spot buyers booked limited volumes at EUR700-740/t ex-works.

Big stockists have not returned to the market looking for volumes yet, but their price ideas are closer to EUR700/t delivered. Sellers have not accepted such prices.

Re-rollers in Italy claim that they have solid order books – selling late March-April rolling – and they feel no pressure to give discounts.

In addition, they need to maintain higher plate prices to cover potentially high Carbon Border Adjustment Mechanism (CBAM) duties for imported slab. Re-rollers estimated CBAM duties for imported slab at EUR30-80/t based on actual emission values. But until exporters obtain the certifications – in 2027 for imports during 2026 – European re-rollers risk that the duties would be calculated based on default values resulting in substantially higher costs.

“CBAM duties for slabs looks well covered by current plate prices, taking into account price rises earlier this year. But this is based on actual values. The risk remains that the costs would be much higher based on default values,” an Italian trader said.

Offers of imported slab in Italy have been reported at $540-550/t CIF, though no transactions have been heard.

In Germany, due to lack of trading activity in the commodity grade plate segment, mills have been trying to focus on sales to projects or under long-term contracts.

“Stockists and cutting centres report a bad turnover in February. So, the mood is worsening and therewith the ex-stock prices cannot be increased and re-purchases are less,” a German distributor said.

German mills have been offering s235jr plate at EUR770-810/t ex-works and s355jr material at EUR850/t delivered.

Offers of s355jr plate from Scandinavia have been reported at EUR850/t delivered Northwest Europe. Italian mills have been offering the similar material at EUR820-830/t delivered Germany.

Offers of imported s355jr plate from South Korea, India and Brazil have been reported at EUR760-800/t DDP Antwerp, posing competition to European suppliers.

Weekly European heavy plate, slab and green steel
	Unit	Term	27-Feb-26	Change
Weekly heavy plate
Northwest Europe ex-works heavy plate	EUR/t	EX-WORKS	770.00	20.00
Germany delivered heavy plate (Northwest Europe)	EUR/t	DEL	820.00	20.00
Italy ex-works heavy plate	EUR/t	EX-WORKS	720.00	0.00
Weekly steel slab
Italy CFR slab	$/t	CFR	535.00	5.00
Weekly green steel
Green heavy plate premium (scopes 1-3 CO2 under 1t)	EUR/t		25.00	0.00

 

A Milan court ordered Acciaierie d’Italia (ADI) to suspend production at its Taranto plant on health grounds, although the ruling will only become effective on 24 August pending required environmental interventions, the industry’s trade unions UILM and FIM-CISL said. 

The ruling followed a legal petition from several Taranto citizens.

The court ruling “required the extraordinary administration of ADI to comply with the provisions of the AIA [Integrated Environmental Authorization], under penalty of the suspension of production in the hot-rolling area of the plant,” UILM said.

No information was confirmed regarding the equipment which could be suspended.

“The reference is to the partial, rather than total, non-application of the Integrated AIA, specifically of certain provisions contained therein that the judges are requesting be supplemented,” FIM-CISL said. The union requested clarifications on the matter.

UILM criticized the Italian authorities for lack of communication and clarity on the production and environmental plans for ADI. The union also highlighted that the legal challenges combined with the limited financing make it difficult for ADI’s extraordinary administration to ensure sustainable production.

Earlier this week, ADI temporarily idled blast furnace (BF) No. 4 for maintenance until end of April. BF No. 2 was restarted on 10 February. The steelmaker plans to double steel production to 4 mt/y by end April 2026, and to continue operating two furnaces. But the recent court ruling could disrupt those plans.

ADI is currently in the process of being sold, with Flacks Group, a United States-based investment firm focused on the turnaround of distressed businesses, discussed in the market as a likely new owner. The tender has not yet been finalized.

Italian coil prices continue to tick up compared with early February, although domestic activity remains relatively subdued. Both small and large buyers have resumed sourcing from the import market, market participants tell Kallanish.

Despite the uncertainty surrounding CBAM costs, larger buyers continue to purchase directly from Asia. One source says they are working closely with suppliers on CBAM certification and are confident that several foreign mills will qualify under actual emissions values, as they intend to preserve their European market share. Smaller buyers, meanwhile, report purchasing only on a delivered-duty-paid (ddp) basis to limit risk.

A trader notes that some traders are prepared to assume the CBAM risk by offering ddp terms, while others remain reluctant due to the potentially prohibitive impact of default CBAM values. Several larger buyers say they are accepting a degree of risk due to their substantial HRC needs. They rely on long-standing relationships with Asian and Middle Eastern suppliers. They expect CBAM charges for their purchases to remain within €50-60/t ($58.94-70.73/t).

Ddp transactions have been concluded around €600-610/t approximately ten days ago. However, offers from Turkey and North Africa have since increased to €620-640/t ddp. A Middle Eastern cargo is rumoured to have been sold at slightly below €530/t cif. One service centre says current domestic levels of €650-660/t delivered are justified, given hot rolled sheet prices of around €750/t delivered. Downstream activity remains somewhat subdued.

Domestic HRC is currently at around €650/t base delivered. Market sources indicate that ArcelorMittal has exhausted allocations for Southern Europe. The producer is now targeting €750/t base delivered for HRC in Southern Europe, while asking prices in Northern Europe remain at around €720/t base delivered.

Availability of cold rolled coil remains limited, and supply of hot-dipped galvanized material is also constrained. Contract prices for CRC and HDG are expected to reach €800/t base delivered, compared with current levels of around €780/t delivered, Kallanish understands.

Italian producers are targeting €810-820/t for HDG, while several other European mills report little or no CRC availability. HDG offers into Italy from other European suppliers are heard at €800-820/t delivered, depending on producer and origin. Limited volumes of imported CRC have meanwhile been concluded at around €740/t base cfr.

Although import activity has recently resumed on both cif and ddp terms, market participants expect bookings to slow again towards May ahead of the new safeguard regime scheduled for July, amid uncertainty over quota allocation and the cost of both CBAM and safeguard.

Recent policy changes are improving sentiment in Europe, but lack of competitively-priced energy remains a fundamental issue, with utilisation of domestic natural gas resources a potential solution. Europe is meanwhile likely to import the majority of its low-emission iron requirement in future, while upscaling limitations could constrain the buildout of electric smelters.

These were the conclusions of Primetals Technologies head of iron – steelmaking and environmental solutions Jan Friedemann Plaul in an exclusive interview with Kallanish at the technology supplier’s flagship location in Linz.

Policy boosts EU sentiment, potentially investment

The uncertainty surrounding the final cost per tonne of imports under CBAM means the new measure’s impact on pricing is unclear, but the EU’s new trade regime due to come into force from July should boost prices. Policy measures have noticeably improved sentiment in Europe, which is reflected in the share prices of listed steelmakers, which have risen in the last six months.

“The stock market normally predicts quite well if something positive is happening. I think the shareholders see it positively. We expect higher earnings, and then I think also the climate for investing is getting better,” Plaul told Kallanish.

Low-cost, predictable energy supply remains critical

The policy measures are however just “protecting the uncompetitive situation in Europe”, he added, while low-cost electricity supply remains the fundamental problem. In the long term on this issue, “I cannot really see an improvement in Europe”, Plaul noted. Despite the significant buildout of renewable energy capacity, Europe remains dependent on imported fossil fuels and energy prices are elevated.

Steelmakers are also sourcing a large portion of their electricity requirement from the spot market – unlike the long-term contracts of the past – making them more susceptible to volatile pricing and thereby hampering investment confidence.

Energy taxes and network charges are also making electricity more expensive and therefore need to be addressed by EU member states’ governments.

With electricity, “predicting on a ten-year horizon what you need to make an investment decision, it’s very difficult – and I think this is a big uncertainty … These are the main driving factors: good visibility on the electricity price and availability, and long-term contracts. If this is more visible, then it’s easier to invest,” Plaul observed.

Domestic natural gas should be utilised

A locally available solution to energy import dependence would be to use the EU’s own reserves of natural gas. However, politics may get in the way.

“For example, Germany has a lot of natural gas reserves in the earth, but doesn’t extract them. Why import from the US? Fracking is similar whether done in the US, Germany, or the Netherlands. It’s a political issue, of course, but to get more stable or stable prices on energy, it would be better to also have safe, sufficient supply of fossil fuels,” Plaul pointed out.

Since natural gas is prone to distribution losses at multiple points during its transport, it would be environmentally friendlier to access and utilise EU resources at source, he added.

Europe likely to import iron requirement

As for the future of ironmaking in Europe, many consider it a strategic imperative to have indigenous ironmaking capability, especially during times of instability. However, ore-based metallics are essentially a raw material. If you look at the major steel producing countries, such as China, Japan or Korea, these all depend on imported raw materials, Plaul said.

Most direct reduced iron is likely to be imported into Europe because of the unfavourable conditions for local production. After energy, bureaucracy is the next major factor that raises investment costs in Europe. “If you build a DR plant in Germany, it looks quite different with the DR plant you would build in the Middle East. Noise protection is a big issue in Europe. New equipment must be integrated into existing steel plants, often near residential areas,” he noted.

There are a number of steelmakers pushing ahead with direct reduction plants in Europe, but they will face costs. “They will have operational advantages, having hot DRI in their plant. But from the opex perspective, it’s most probably not the cheapest at the moment,” he added.

Importing from the Middle East, on the other hand, involves political risks. “Then it’s a question: do I pay for this additional risk or can I protect this risk in a certain way?” Plaul asked.

One way for EU mills to increase their raw material supply security will be to sign offtake agreements with overseas DR plants, or even become shareholders in them.

Europe remains decarbonisation hot spot

Despite recent uncertainty over decarbonisation, major European steelmakers are continuing to carry out transition investments and Europe remains the hot spot. However, hurdles need to be overcome.

“You can see the difficulties in executing such big projects: unstable political conditions, hydrogen is a big issue. The commitment, especially in Central Europe, on this hydrogen network, is … fading … Every investment which was also sponsored by the government was based on a certain amount of hydrogen utilisation. And these networks are not coming up as fast as projected,” Plaul observed.

The US is the number two hotspot for steel decarbonisation, given its mainly scrap-EAF-based steel mill fleet and, next to its conventional mini-mills, the larger EAF flat steel mills it is focusing on to supply the automotive industry, he added.

EAFs will produce flat steel, with compromises

In Europe, the future fleet of EAFs will produce automotive grade steel but carmakers may need to adapt their quality requirements, Plaul noted. “I think it’s a must. All these integrated steel producers have promised the companies who are buying steel from them that they will get similar products like before,” he said. Several steelmakers are simulating automotive steel production through the EAF route, in alignment with the automotive industry, he added.

“The steelmakers have to adapt their whole value chain on the changed conditions. But also the automotive industry has to adapt their expectations on certain [mechanical properties] to use green steel,” he said.

The big carmakers are demanding and have very high expectations from their suppliers but, together with steelmakers, they are working on developing products in the EAF. “The target is, for sure, to produce high-quality products on the electric arc furnace – all integrated steelmakers have this target, because this is where they earn the most money,” Plaul added.

Electric smelters needed but upscaling a challenge

If the energy transition is to happen fast, electric smelters will be needed to utilise the mainly low-grade iron ore deposits found globally, with direct reduction-grade ore availability limited. However, upscaling will be a limiting factor.

The smelter is “probably the biggest development step, which still has to be proved”, Plaul noted. Besides thyssenkrupp building large-capacity smelters, Primetals is constructing a 300,000 tonnes/year smelter jointly with Posco, and a joint smelter demonstration plant with voestalpine, which aims to de-risk the technology.

The smelter is significant as it provides competition with the blast furnace, whose economics have been difficult to beat for decades. A single BF can produce up to 5-6 million tonnes/year of hot metal. “And with the smelters, you need more aggregates to produce the same amount. The upscaling of the smelters is challenging. It might also be a limiting factor for the future,” Plaul warned. One smelter is predicted to produce 1.2-1.5m t/y of hot metal.

Ore availability will nevertheless drive their development, with the mining landscape unlikely to change significantly, as mines can take up to 30 years to develop. Although there are new high-grade ore mines coming online, “it’s basically not in the amount that you can make a whole transition of the steel industry,” Plaul pointed out. “This is the question: is the steel industry transition following the availability of iron ores … or do we develop new technologies which can take existing iron ore material?”

 

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.”