Year: 2026

Leonard spoke during the “Automotive and Construction Demand Outlook” panel at Fastmarkets’ Circular Steel Summit 2026 on Wednesday January 28 in Houston, Texas, offering a forward-looking assessment of the main demand drivers for steel.

Steel production and prices
Section 232 tariffs have supported US steel production, which increased through 2025 even amid subdued end-market demand, Leonard said, adding that this has come at the expense of output in other developed regions, particularly Europe.

Looking ahead, the firm expects US steel production growth to remain positive but muted, reflecting sluggish automotive demand and only selective strength in construction.

Steel prices have risen following recent tariff measures, but not to the same extent seen after the initial Section 232 tariffs in 2018. Leonard attributed this to weaker underlying demand conditions and greater cost absorption within supply chains.

“Compared with previous cycles, the demand environment today is fundamentally different,” Leonard said, adding that steel prices are expected to edge higher, but without sharp upside.

Automotive: Demand resilient but structurally constrained
Oxford Economics maintains a relatively bullish outlook for the US economy overall, with gross domestic product growth expected to outpace most other developed economies. But Leonard cautioned that this strength is narrowly concentrated in areas such as data centers and artificial intelligence (AI), rather than broad-based consumer demand.

In the automotive sector, fears that tariffs and inflation would significantly curb vehicle demand have not materialized so far. Leonard said that higher costs linked to tariffs have largely been absorbed by automakers and overseas suppliers, limiting the impact on final vehicle prices.

Oxford Economics estimates that roughly $20 billion in costs have been absorbed upstream in automotive supply chains, supporting demand in the short term. But Leonard warned that this dynamic is unsustainable and said price pressures could intensify if tariffs persist.

Automotive demand remains constrained by high financing costs, which have not fallen meaningfully despite a stabilization in the Federal Reserve’s policy rate. Vehicle affordability remains weaker than pre-pandemic levels, particularly as electric vehicle (EV) tax credits expire and interest costs stay elevated.

Looking ahead, Oxford Economics’ forecast for US automotive production through 2027 is flat, with total output growth of around 1% — well below historical norms. Any incremental growth is expected to come primarily from hybrid and electric vehicles.

Leonard highlighted that EVs, while lighter in steel share, actually contain more steel per unit on a weight basis due to heavier battery systems, creating limited but positive tailwinds for steel demand.

Construction: Cost pressures and uneven growth
Construction remains the largest single source of steel demand, accounting for roughly half of total consumption, Leonard said. But the outlook is mixed and uneven across segments.

Effective tariff rates on building materials remain elevated due to Section 232 tariffs on steel and additional duties on lumber imports, particularly from Canada. These material cost pressures, combined with persistent labor shortages, continue to weigh on project viability.

Structural labor tightness in construction has been exacerbated by demographic trends and immigration enforcement, Leonard said, further pushing up project costs and limiting new starts.

While residential construction is expected to recover modestly as long-term interest rates ease, growth is concentrated in less steel-intensive segments, such as single-family housing. High-rise residential construction — a more steel-intensive segment — is not expected to see meaningful growth, Leonard said.

Non-residential construction presents a more complex picture. Manufacturing-related construction surged following policy support such as the CHIPS and Science Act, driving strong steel demand in recent years. Meanwhile, traditional office construction remains structurally weak.

Leonard said that growth in commercial construction is now being driven almost entirely by data centers linked to AI and cloud computing. These projects are classified as office construction but differ significantly in structure and steel usage.

Energy and infrastructure support steel demand
The expansion of data centers is also driving strong demand for power generation and grid infrastructure, creating indirect but meaningful steel demand. Oxford Economics expects substantial investment in power generation capacity toward the end of the decade, although permitting constraints will slow deployment.

Transport infrastructure is another source of growth, supported by government spending programs.

At a regional level, Oxford Economics sees non-residential construction growth concentrated in states such as Pennsylvania, Nebraska and Louisiana, with other pockets of growth across the western US.

Spanish seamless tube supplier Tubos Reunidos (TR) is developing a seamless pipe capable of meeting the specific requirements of the hydrogen sector. As part of its participation in the H2SKID project, the company aims to support the expansion of “green” hydrogen use and industrial decarbonisation in Spain, Kallanish notes.

The project aims to develop a 1.25 MW experimental portable electrolyser, conceived as an enabling solution for the supply of green hydrogen to final industrial users. The initiative is being led by a Basque consortium including Tubos Reunidos, ArcelorMittal Sestao, Sarralle, ABC Compresores, Matz-Erreka, Flubetech Coatings, Mugape, Sener, Team Group, Torraval Cooling, and Zigor Corporación.

“Material performance in hydrogen environments is a critical factor in ensuring the safety, reliability and durability of industrial infrastructures, making this contribution essential to transforming technological innovation into solutions ready to operate under real conditions,” TR says. “Through initiatives such as this, the Group consolidates its role as a technological partner in the development of advanced industrial solutions that drive the energy transition and enhance the industrial competitiveness.”

The H2SKID project will validate the use of green hydrogen in a controlled environment in the ladle preheating burner and/or tunnel furnace area at ArcelorMittal Sestao.

 

The European Parliament’s Committee on International Trade (INTA) has voted to approve the proposed new steel trade regime and start interinstitutional negotiations between Parliament, Council and Commission. Unused quota volume carryover to the following quarter has been rejected, Kallanish notes.

The proposal to implement the melted and poured rule “only where justified by circumvention risks” was also rejected. INTA voted to maintain the original wording that gives the European Commission the power to lay down “the detailed rules for identifying the country in which the steel used in the production of the product is melted and poured and to amend Annex II to this Regulation”.

The total proposed annual tariff quota volume remains at 18,345,922 tonnes. Russia and Belarus product remains banned.

The committee approved the motion for the Commission to engage in “proactive and transparent communication with trade partners to clearly explain the reasons for adopting this measure and to identify ways to maintain equal and fair conditions so as not to disrupt the existing spirit of genuine trade cooperation, particularly with existing and future FTA partners affected by this instrument.”

However, it rejected the proposal that trading partners that have free trade agreements with the EU should receive preferential quota distribution. It also rejected the exclusion of Switzerland from the application of the out-of-quota duty.

This, however, seemed to be contradicted by European trade commissioner Maroš Šefčovič who told CNBC TV18 on Tuesday after the EU-India FTA was concluded that India, as an FTA partner, would have a privileged position in negotiations over access to the EU steel market.

The new trade regulation proposal raises the big question of how quota allocations will be negotiated with the EU’s multitude of FTA partners. This is likely to be a highly complex procedure since FTAs protect preferential trade with the EU and will be very difficult to change, Van Bael & Bellis trade lawyer Yuriy Rudyuk pointed out last month.

INTA also rejected the proposal that a defined minimum share of value added, components or materials should be sourced from within the Union for publicly funded projects, and that, in general public procurement, contracting authorities should give preference to steel and steel-containing EU-produced products.

The proposed regulation will now be voted on by the European Parliament in plenary next month, which will either endorse the committee’s decision to enter into negotiations or refer the report back to the committee.

 

The conclusion of the India-EU Free Trade Agreement (FTA) marks a strategic shift in India’s trade engagement with Europe, but its immediate impact on the steel sector remains limited, with carbon regulation, tariff structures and timing emerging as binding constraints, Kallanish understands.

Market participants broadly agree that steel trade is unlikely to receive a near-term boost, as CBAM remains fully intact. CBAM does not provide exceptional treatment for individual countries or industries and the FTA does not alter its application.

This pressure has intensified following the withdrawal of EU Generalised System of Preferences (GSP) benefits for India from 1 January 2026, under the bloc’s graduation rules. An industry veteran stresses that this move is not part of the FTA but materially reshapes market access conditions.

The EU removed GSP tariff preferences on around 87% of Indian exports, including iron and steel. As a result, these products now face most-favoured nation (MFN) duties of 2-7%. Sources estimate these translate into an average competitiveness loss of around 20%, once duty impact, logistics and pricing effects are combined with CBAM compliance costs.

India’s commerce ministry highlights the FTA includes forward-looking MFN assurances under CBAM, enhanced cooperation on carbon pricing recognition, verifier accreditation, best available technology and decarbonisation pathways, alongside access to EU technical and financial support. Market participants acknowledge these elements improve long-term visibility, but stress they do not ease near-term cost pressures.

“[Steel] exporters are set to face significant pressure following the withdrawal of GSP benefits and implementation of CBAM. However, a recovery may emerge by 2030 if FTA quotas [TRQs] can offset these costs, provided India successfully scales green steel production to meet CBAM standards for sustained EU market access,” an industry veteran notes.

“But we are happy after India declared the new FTA as the ‘mother of all deals’,” he adds.

Some participants see greater downside than upside risk in the near term, as improved access under the FTA could support inflows into India of specialised EU-origin steel, particularly plate and rail-linked products.

Kallanish analysis suggests the real steel impact of the India-EU FTA is indirect, via steel-consuming sectors (see table).

The engineering exports sector, a key steel end-user, stands out as the most positively impacted. Industry estimates suggest engineering exports to the EU could rise by around 25% year-on-year, from a current base of about $21 billion, supporting structurally higher domestic steel demand.

Automobiles may also benefit from quota-based liberalisation and regulatory cooperation. Other end-user sectors, including electronics, medical instruments, pharmaceuticals, aerospace and others, similarly support incremental steel demand.

Impact analysis

Segment	FTA provision	Key data & tariffs	Impact on Indian steel
Steel Exports	Included under TRQs	GSP MFN duties (typically ~2-7%) remain; preferential access managed via quotas	Marginal/strategic: Limits direct volume but provides predictable access
Steel Imports	22% duty cut to 0% phased over 10yrs, €1.5 billon in 2024	Current ~0.3-0.4mt, mainly specialty steel	Moderate risk/opportunity: Benefits domestic mfg/infra via cheaper high-end steel as landed costs fall, but risk for domestic steel producers
CBAM	No outright exemption; technical cooperation expected	–	Structurally negative: high compliance risk for non-green steel
Engineering Goods	Current EU tariffs up to 22% removed	Estimate +25% y-o-y to $21bn	Strong Positive: Significant indirect demand for domestic steel
Mines & Minerals	Zero duty across 100% of tariff lines	Removes cost barriers for value-added mineral exports	Strategic Positive: Fuels partnerships with EU steel manufacturers
Machinery & Aerospace	Product Specific Rules with transition periods	Encourages ‘Make in India’ for complex manufacturing	Positive: Long-term growth in specialised steel consumption
Decarbonisation	Technical group for BAT, MRV, and verification	Focus on alignment with EU carbon standards	Strategic Positive: Essential pathway for sustained EU market access

Source: commerce ministry, industry estimates, Kallanish

While the India-EU FTA enhances competitiveness by eliminating tariffs, CBAM remains a critical structural hurdle, shifting the advantage toward low-carbon producers through technical cooperation rather than tax exemptions.

Overall, the India-EU FTA reshapes the downstream demand environment for steel without changing the fundamentals of steel trade. For Indian steel, the opportunity lies less in near-term exports to Europe and more in supplying a more export-oriented, higher-value and increasingly decarbonised manufacturing base domestically.

 

French steel transaction prices are edging up by an average of €5-10/tonne ($6-12/t), as long product mills attempt to implement increases linked to higher production costs, rising scrap prices and the impact of CBAM on imports, Kallanish notes.

According to market sources, mills have announced hikes of up to €20/t, but buyers have generally accepted increases of no more than €10/t, depending on their December purchase levels.

Consumption remains weak, however, with several buyers telling Kallanish that price rises are proving difficult to pass downstream. Sources agree that CBAM is having only a limited impact on the longs market, where competition among European producers remains intense. While some restocking was reported in December, demand has been weak in January.

By contrast, sheet and tube prices are increasing gradually, supported by stronger protection measures on coil. Price increases for long products, however, remain uncertain.

One buyer notes that mills with a rigid attitude on price hikes are losing orders. Another large buyer adds he has purchased around three times less rebar than usual in France, instead sourcing material from other cheaper European suppliers.

French longs increases are mild as competition with other European producers results in cheaper material available to French buyers.

Sections mill prices are increasing by €20/t officially in France but not all European producers are implementing the hikes, while producers from Spain only increased values by €10/t for sales in France.

First-category sections in France have increased slightly from €730/t delivered last month to €735-740/t this month on average.

Domestic merchant bar prices are increasing in January contracts by some €10-15/t to €220-230/t base delivered, excluding €420/t in size extras. Rebar prices also ticked up by €10/t to about €600-610/t delivered on average.

Meanwhile, France’s construction sector continues to underperform. Market sources report cautious ordering from construction companies and do not anticipate any improvement before the second half of the year.

One source notes that infrastructure projects funded by the EU’s post-pandemic recovery programme are expected to fade in the second half of 2026 and eventually disappear, as EU rules require the funds to be fully allocated by year-end. Sources add that a substantial share of construction steel produced in France last year was absorbed by EU financed infrastructure projects, leaving the sector exposed as this support comes to an end.

 

The European Union has postponed its Accelerator Act until the end of February, a spokesperson of the cabinet of the European Commissioner for Prosperity and Industrial Strategy Stéphane Séjourné told Platts, part of S&P Global Energy on Jan. 26.

This is the second delay for a key legislation designed to boost demand for EU-made low-carbon steel and other industrial products.

“It has been postponed in order to maintain this to a very high level of ambition, as the deal is discussed today, and we believe that ambition should prevail over haste,” the spokesperson said.

The legislation was originally scheduled for publication by the end of December 2025, then pushed to the end of January before the latest delay to February. The Accelerator Act represents a critical piece of EU industrial policy aimed at boosting competitiveness, decarbonization and demand for European-made products.

Steel implications

For the steel sector, the legislation could prove pivotal as European steelmakers invest heavily in cleaner production technologies to manufacture low-carbon emissions steel. The act is expected to include public procurement requirements that would mandate a significant percentage of low-carbon steel made in Europe for infrastructure projects, rail networks, renewable energy installations and public buildings.

These sectors represent enormous steel demand, and preferential treatment for EU-produced low-carbon steel could provide crucial market support as the industry transitions to cleaner production methods.

The European steel industry faces mounting pressure from global overcapacity and geopolitical tensions that are reshaping supply chains.

Séjourné has also proposed another important measure for the steel industry — the new imports measures designed to replace the current safeguard that is due to expire at the end of June. The new measures must still be discussed by the plenary, as the committee already discussed it, the spokesperson said.

At the end of December 2025, the Council maintained the core protective elements of the Commission’s proposal, notably the substantial reduction in import quotas (limiting tariff-free import volumes to 18.3 million mt/year, a reduction of 47% compared to 2024 steel quotas) and the doubling of the out-of-quota duty to 50% compared to 25% under the current steel safeguard. At the same time, it incorporates several amendments to increase flexibility, legal clarity and consideration for the economic interests of downstream users.

Platts, part of S&P Global Energy, assessed Northwest European hot-rolled coil carbon-accounted at Eur705/mt ex-works Ruhr Jan. 23, up Eur5/mt day over day.

On Jan. 23, Platts assessed domestic HRC in Northern Europe at Eur635/mt ex-works Ruhr, and imported HRC in Northern Europe at Eur505/mt CIF Antwerp, unchanged day over day.

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In Northern Europe, major integrated mills followed market leader ArcelorMittal and also announced higher offer prices for April-delivery coil.

Notably, in Germany offers were reported at €670-675 ($799-805) per tonne for April delivery, while a supplier in the Benelux area was hoping to get around €675-680 per tonne ex-works.

ArcelorMittal kept its offers at €700 per tonne delivered (€685-690 per tonne ex-works) for April volumes.

Major suppliers in the region were practically sold-out for March deliveries already, market sources said.

New offers have not yet been achieved in any deals, with buyers’ estimates of achievable prices at €640-660 per tonne ex-works.

“There is no major restocking yet, but mills are well booked and are absolutely in no rush,” a buyer in Germany said. “Buyers, however, will not have many options to choose from – importing is a total disaster because of CBAM.”

As a result, Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was €649.50 per tonne on January 27, up by €3.25 per tonne from €646.25 per tonne on January 26.

The index was up by €8.75 per tonne week on week and by €22.00 per tonne month on month.

The corresponding daily steel hot-rolled coil index, domestic, exw Italy, was calculated at €637.96 per tonne on Tuesday, increasing only by €0.46 per tonne from €637.50 per tonne a day earlier.

The index was up by €6.29 per tonne week on week and by €14.84 per tonne month on month.

Italian producers were still able to offer March-delivery coil, according to several market sources.

Target offers were heard at €670-680 per tonne delivered (€655-665 per tonne ex-works).

Buyers estimated achievable prices at €630-640 per tonne ex-works, in line with the most recent transactions.

“Italian suppliers moved to increase offers on [January 23], following ArcelorMittal’s example, but these new prices have not yet been accepted by buyers,” a trade source in Italy said.

Industry sources agreed that the implementation of CBAM and its effects on new imports remained the major driver behind recent price increases in the European market.

“CBAM has turned the import business area into a casino – we are gambling with prices, we have no idea what the final costs of the imported coil will be in the end,” a second buyer in Italy said.

“Risks of new imports are unprecedented. We buy imported coil today, not knowing the exact price when it arrives in Europe,” a third buyer said.

Market sources reported offers from Turkey at €520-530 per tonne CFR including anti-dumping duty, and at €540 per tonne from Algeria and Saudi Arabia.

On a DDP basis, with CBAM costs partially accounted for, Turkish HRC was on offer to Italy around €630-640 per tonne, market sources said.

From Asia, HRC offers were reported at €610-620 per tonne DDP, but trade sources were cautious about CBAM costs in this case.

“Asian suppliers have high default values and long lead times. It’s a risky booking because CBAM costs eventually might exceed those [quoted] in the initial agreement,” another buyer said.

Another trade source said that there were some HRC offers from Asian mills available at prices “below €600 per tonne DDP,” but this was not confirmed by the market at the time of publication.

The tone of European domestic market for steel hot-rolled coil (HRC) continued to strengthen despite cautious demand while competition against imports weakened following the introduction of the EU’s Carbon Border Adjustment Mechanism (CBAM), Fastmarkets heard on Monday January 26.

“End-user demand remains cautious, but expectations for a gradual price increase persist amid CBAM-related uncertainty, encouraging buyers to prioritize European material,” a buyer from the Benelux area said.

A producer from the same region reported that official offers of HRC scheduled for delivery in April were €685 ($803) per tonne ex-works, in line with the market leader.

Nevertheless, estimates of workable prices for April delivery varied within the range of €650-660 per tonne ex-works. This was still up from €640-645 per tonne ex-works heard in recent estimates of workable prices for March-delivery coil that was still available from some suppliers in Northern Europe.

Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, was €646.25 ($764.64) per tonne on January 26, up by €3.75 per tonne from €642.50 on January 23.

The index was also up by €5.62 per tonne week on week and by €18.75 per tonne month on month.

In Italy, offers of February- and March-delivery HRC were heard at €650 per tonne ex-works, with some suppliers ready to give concessions down to €630 per tonne ex-works but others remaining firm.

Estimates of workable prices varied within the range of €630-640 per tonne ex-works.

As a result, Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Italy, was calculated at €637.50 per tonne on Monday, up from €635.00 per tonne on Friday.

The index was up by €5.83 per tonne week on week and by €14.38 per tonne month on month.

“Coil prices in Italy have edged upward slightly, supported by limited import competition and a growing shift toward EU suppliers,” one market source said.

Asia-origin HRC was quoted at €610-620 per tonne DDP, while a Turkish HRC offer was heard at €510 per tonne CFR, excluding anti-dumping duty and CBAM-related costs.

“Most service centers remain reluctant to take on CBAM exposure,” the source added, “and prefer prices that fully incorporate these costs.”

 

Polish domestic rebar and wire rod prices climbed further during the week to Friday January 23 amid growing feedstock costs caused by tighter availability.

Market participants cited increasing scrap and electricity costs as the primary reason for mills’ higher offers, which is a trend common in many European markets.

Harsher-than-normal winter weather is also slowing scrap collection across the region.

“We sold several [scrap] cargoes earlier this month but we cannot deliver them,” one trader said, referring to weather conditions.

Ukraine has also imposed a complete ban on exports of scrap out of the country for 2026, while in 2025 the country delivered around 300,000 tonnes, according to the trader.

In addition, the introduction of the Carbon Border Adjustment Mechanism (CBAM) on January 1, 2026 has caused uncertainty in the import sector, resulting in delays in bookings of import billet and competing import long steel products.

In such conditions, mills in Poland have raised offers for both rebar and wire rod.

Rebar offers were between 2,550 zloty ($716) and 2,700 zloty per tonne CPT, with workable levels estimated at 2,550-2,600 zloty per tonne CPT.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, cpt Poland was 2,550-2,600 zloty per tonne on Friday, up from 2,480-2,550 zloty per tonne one week prior.

Wire rod offers varied within 2,600-2,700 zloty per tonne delivered, with workable prices said to be within 2,600-2,650 zloty per tonne delivered.

Fastmarkets’ weekly price assessment for steel wire rod (drawing quality), domestic, delivered Poland was 2,600-2,650 zloty per tonne, stable week on week.

While prices were rising on higher feedstock costs, demand was said to be muted due to slower activity at construction sites as well as sufficient customer stocks.

Offers of Italian rebar were heard at €605-610 ($715-721) per tonne CPT in the reported week.

Wire rod of the same origin was offered at €630-640 per tonne CPT.