Category: Latest Updates

Crude steel output at German mills this year has shown “an altogether massive negative trend”, says the country’s steel federation, WV Stahl.

From January through September, output was only marginally higher than 25 million tonnes, whereas it reached 28mt in the year-earlier period.

Production on the oxygen converter route saw a steeper decline than on the EAF route, at 13% on-year to 17.4mt. At EAF mills, it sank by 5% to 8mt. However, the less pronounced drop is mainly attributable to low EAF output figures in 2024, Kallanish hears from WV Stahl.

The difference appears to be flattening out somewhat, after September registered 3mt of overall crude steel output, down 1% on-year. The oxygen route actually gained 4% y-o-y to 2mt, while the EAF route slumped 10% to 891,000t.

Christian Koehl Germany

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The European Union’s current climate policies risk accelerating the collapse of blast furnace-based steelmaking in the bloc, which is being hit by the combination of the Carbon Border Adjustment Mechanism (CBAM) and phase-out of free CO2 allowances, says Italian steelmakers’ association Federacciai president Antonio Gozzi.

Speaking at the association’s annual assembly on Monday monitored by Kallanish, Gozzi said that with CBAM set to take effect on 1 January 2026, the progressive reduction of free emission quotas for hard-to-abate sectors will drive up the price of CO2 allowances. Some forecasts estimate that carbon prices could ultimately reach $200/tonne, adding significant costs for energy-intensive industries and further burdening households and businesses.

“Without free CO2 allowances, all European blast furnaces are destined to close due to the unsustainable additional production costs,” Gozzi warned. This would be “an absurd outcome” given the strategic importance of blast furnace technology for producing certain high-grade steels, he added. He argued that carbon capture technologies, if adequately supported by EU incentives, could allow these plants to survive.

Gozzi also criticised “ill-conceived hydrogen steel projects” that are failing across Europe. The shift towards electric arc furnace production, which relies on ferrous scrap, will limit Europe’s ability to produce deep-drawing steel required for car body automotive production, he noted. “After 2035, the remaining European car industry will have to import steel sheet for car bodies from competitors like China, Japan, and South Korea,” he said.

He warned the next phase of the EU Emissions Trading System (ETS) could become “the final nail in the coffin” for European manufacturing if reforms are not made. “For this reason, it is necessary to urgently review the entire ETS framework, also considering its impact on energy prices … An emergency measure is needed to immediately halt the extension of the ETS/ETS2 to new sectors such as SMEs and residential buildings and to prevent the elimination of free allowances for hard-to-abate industries. We call on the Italian government to take prompt action … before it is too late,” Gozzi demanded.

Finally, he called for technological neutrality in EU climate policy. “Decarbonisation should not rely on a single technology such as electrification,” he stressed, adding that biofuels, synthetic fuels, carbon capture, and nuclear energy must all be part of a balanced approach.

Natalia Capra France

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To protect Europe’s industry from unfair trade and global overcapacity, a redefinition of global trade rules is essential that ensures fairness rather than “wild” competition, president of Italian steelmakers’ association Federacciai Antonio Gozzi said at the association’s annual public assembly on Monday monitored by Kallanish.

He questioned whether WTO norms, respected mainly by Europeans, remain adequate. Without robust defensive trade policies, Europe’s industrial base could face collapse within years, Gozzi warned. He welcomed the initiative by EU Executive Vice President Stéphane Séjourné and Commissioner Maroš Šefčovič to review the bloc’s steel safeguard measures, expressing hope that the new rules will be swiftly adopted.

Additional support, he said, should come from the “Buy Europe” policy, requiring public procurement to source at least 60% of steel from European producers, and the Carbon Border Adjustment Mechanism (CBAM), which aims to shield EU steel from unfair competition.

Escalating US protectionism is reshaping steel trade flows to Europe’s detriment. Gozzi noted that the direct effects of US tariffs on Italian steel have long been absorbed. The Trump administration’s 25% duties on European steel, imposed since 2018, have already reduced Italian exports to the US to less than 1% of national output. With the new 50% tariffs, those exports may disappear entirely.

However, Gozzi’s main concern lies with indirect effects, caused by trade diversion. As high tariffs block exports to the US, non-US producers, particularly China, are expected to redirect their excess output to Europe. He warned that China’s massive overcapacity, especially in steel, poses a growing systemic risk.

Natalia Capra France

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The European Green Deal represents an “ideological and extremist” approach that has undermined the competitiveness of European businesses, to the detriment of economic, social, and environmental development, says Italian steelmakers’ association Federacciai president Antonio Gozzi. Rising global emissions continue to outweigh those reduced in Europe.

Even if all European industries were to suddenly stop production, global emissions would still continue to rise, as India, China, and the United States are not required to undertake costly decarbonisation efforts, he said at Monday’s association annual public assembly monitored by Kallanish.

Regulation imposed by the EU has been a major factor in the loss of competitiveness and market share of many sectors of European industry. The Green Deal has effectively supported China’s industries for solar panels, inverters, turbines and wind blades, energy storage systems and batteries, and electric vehicles, having now become the undisputed global leader in the production of these technologies. This has led to Europe becoming strategically dependent, Gozzi warns.

“I recall the simple yet powerful words spoken by Prime Minister Giorgia Meloni at last year’s Confindustria Assembly in Rome: if decarbonisation turns into industrial desertification, it is a disaster, because there is nothing green in a desert,” Gozzi said.

He highlighted that the carbon intensity of Italian steelmaking is 40% lower than the EU average and 61% lower than that of China, confirming Italy’s position as a European leader in sustainable steel production.

Gozzi reiterated the steel industry represents true Italian excellence and highlighted the distinction between the crisis of the former Ilva and that of the Italian steel sector as a whole. The association supports the government’s efforts to save Ilva but stresses that it is first necessary to create the enabling conditions that could convince one or more private steelmakers to take on the risk of Taranto. No Italian steelmaker has expressed interest in Taranto, as the conditions for investment are not yet in place and the local authorities are against saving the company.

As it is unlikely that Taranto will increase its production to 6 million tonnes/year, a social plan for workforce redundancies resulting from the downsizing of production levels is key to the steelworks’ survival. This should not be borne by private investors willing to invest, Gozzi added.

He also expressed doubt about the current state intervention, using substantial public resources, to facilitate a foreign investment in Piombino. This project, which also appears economically unsustainable due to its excessive level of debt, does not support the recovery of Taranto, as it competes directly with it and is entirely based on scrap, given that no investment in a direct reduced iron plant is planned.

Additional demand for 3m t/y of scrap in an already “tight” market risks becoming a major destabilising factor for the entire electric steel industry in Italy, Gozzi concluded.

Natalia Capra France

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Italy’s steel federation, Federacciai, has called for the urgency of a true European industrial policy where important tools as the proposed import measures, together with the CBAM and affordable energy costs, are key for the survival of the Italian and European steel industry.

“In Bruxelles is where the major decisions must be made to avoid Europe’s geopolitical, economic, and industrial irrelevance in a world that is changing at very high speed,” Antonio Gozzi, President of Federacciai said opening the 2025 Public Assembly of the Association, which took place Nov. 10 in Bergamo, North Italy, in the presence of the European Commission Executive Vice-President for Cohesion and Reforms, Raffaele Fitto, the European Commission Executive Vice-President for Prosperity and Industrial Strategy, Stephane Sejourne, and the President of Confindustria, Emanuele Orsini.

Gozzi said that while US tariffs would have limited direct impact on Italy — whose US shipments represent less than 1% of national output — the indirect consequences could prove devastating.

“We are heading straight into a trade-diversion shock,” Gozzi said, warning that China’s structural overcapacity and export dependence would redirect volumes toward Europe.

Policy challenges

Gozzi cautiously backed CBAM as “indispensable” but warned it risked accelerating European blast furnace closures without adequate safeguards. The phase-out of free emissions allowances could push carbon prices to $200 per metric ton, making primary steel production uneconomic, he said.

“Without a realistic glidepath, we are heading toward the shutdown of Europe’s last blast furnaces — and with them, our strategic capacity to produce key grades of steel,” Gozzi told the assembly.

He criticized the EU’s focus on hydrogen-based steelmaking projects as “absurd” failures, advocating instead for carbon capture technologies at existing blast furnaces.

Energy costs remained his primary concern, with Europe’s marginal pricing system — which sets power prices based on gas-fired generation burdened by ETS costs — undermining competitiveness.

Gozzi praised Italy’s upcoming Energy Release scheme offering renewable electricity at Eur60-65/MWh to energy-intensive industries, but said Europe lacked coherent long-term, affordable energy planning. He called for cross-border agreements allowing direct power purchase agreements with producers, including France’s nuclear operator EDF.

The Federacciai chairman urged the adoption of “Buy European” obligations requiring 60% EU sourcing in public procurement, echoing recent comments by German Chancellor Friedrich Merz.

Sejourne indicated EU procurement rule revisions could boost European steel demand.

A regulatory dispute over “green steel” definitions is adding uncertainty. Draft EU proposals would label blast-furnace steel achieving 20% emissions reductions as green, despite absolute emissions remaining seven to eight times higher than electric-furnace steel. Italian producers, generating nearly 90% of output via electric arc furnaces, condemned this as “greenwashing.”

Italy’s steel production fell 5% to 20 million mt in 2024, with sector turnover of Eur40-60 billion annually and over 70,000 direct jobs. Gozzi expects 2025 output to match 2024 levels, with recovery dependent on new safeguard measures expected to be put in April 2026.

Platts, part of S&P Global Commodity Insights, assessed domestic hot rolled coils in Southern Europe at Eur595/mt ex-works Italy Nov. 10, stable day over day, while Southern Europe HRC was unchanged at Eur490/mt CIF.

The European Commission expects tough negotiations with free trade agreement partners over tariff-rate quota allocations in the proposed new steel safeguard measure, but may provide those partners, as well as those countries agreeing measures to tackle overcapacity, with favourable treatment. There is meanwhile no deadline for these negotiations to conclude.

So explained Léon Delvaux, director of Directorate E at the European Commission’s Directorate-General for Trade and Economic Security (DG Trade), at a hearing on Tuesday of the European Parliament’s Committee on International Trade (INTA).

Some 67% of EU steel imports come from FTA partners, he pointed out. “So it’s clear that, given the objective we have in terms of [import] volume reduction, this will be a very difficult discussion with third countries, and in particular, of course, FTA partners,” Delvaux noted during the session monitored by Kallanish.

The negotiations, carried out according to WTO process, have no deadline and will begin once the Commission receives a mandate from the European Council. Most third countries have already informally contacted the Commission for an explanation of the new measure, he added.

The enforcement of the new safeguard measure will nevertheless not depend on the conclusion of these talks. “I think we believe it’s important that we keep our autonomy and autonomous ability to take measures in this field,” Delvaux noted.

The Commission will also continue discussions with partners in the Global Forum on Steel Excess Capacity, in the hope of a better outcome than has hitherto been the case. The forum’s attempts since its founding in 2018 “to collectively cope with overcapacity have not been fruitful”, he added.

The Parliament’s newly elected rapporteur on the new safeguard measure proposal, Karin Karlsbro, also INTA Committee vice chair, is scheduled to present her report on the matter on 2 December. It will then be open for amendments and a vote by the ITRE Committee by mid-January, after which Parliament will vote on Karlsbro’s final report most likely in February, said INTA Committee chair Bernd Lange.

During the hearing, Karlsbro said the new measure is needed more urgently than by July 2026, when the current safeguard expires.

“Importers are stockpiling cheap steel with lower environmental standards, and our producers are getting further and further away from re-establishing their capacity in production every day that we do not have better measures in place,” she noted.

“We obviously do not want to make things impossible for our industries dependent on availability of steel. But it is certainly also not of European interest to create a new sector dependency on China. On the contrary, it is most certainly of common European interest to secure crucial investments in decarbonising the steel production, as well as to create legal certainty for both those industries in dire need of steel as well as the steel sector itself,” she continued.

She added that the new measure is likely to give a push to collaboration with “like-minded” partner countries on how to tackle overcapacity.

Adam Smith Austria

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Coil derivatives such as tubes and sheets are finally registering price increases in southern and western Europe, driven by the recent rise in coil prices. However, consumption remains stagnant and trading volumes are still limited.

The market is divided. Upstream producers are optimistic about price increases and trade measures, while downstream demand from end-users and steel processors remains weak, showing no signs of recovery in the coming months.

Despite the uptick in tube and sheet prices, margins remain tight and in some cases negative. The sharp coil price increases announced by producers are a source of concern. One northern European producer has set a target of €700/tonne ($806/t) base delivered for hot rolled coil in the first quarter of 2026, a level widely considered as excessive. Other producers are taking a more moderate stance, quoting around €620-630/t base ex-works for January.

These proposed increases could further discourage buyers. Service centres tell Kallanish they are already delaying coil purchasing decisions. This is particularly true for end-users such as crane manufacturers and steel processors supplying the agricultural sector, who are currently facing a downturn, cutting production, and implementing temporary layoffs.

Some steel processors believe steelmakers lack a clear understanding of the extent of the consumption slowdown in Europe. Key sectors such as agriculture, heavy machinery, and automotive continue to struggle and do not anticipate any improvement in the first half of 2026.

Demand for white goods, however, appears to have stabilised. One company source reports steady sales in 2025 and, for the first time, does not expect further consumption decline in 2026. That does not however mean they foresee any meaningful increases in the first half of next year.

While coil prices are rising, some traders are reported willing to absorb the additional cost of CBAM. A German trader, however, states he cannot do so.

Service centres and re-rollers are receiving large volumes of material previously ordered from Asia, and ports in Italy are reportedly full. Italian sources note a shortage of cold rolled coil, while importing hot-dipped galvanized coil has become too costly. As a result, CRC and HDG prices are rising sharply, with demand now exceeding supply. One buyer reports receiving a quote of over €800/t base delivered in Europe for HDG.

A seller of sheets and strips reports the market is currently oversupplied, as many steel processors expanded capacity following the strong performance of 2021 and 2022 and are now facing reduced consumption levels. An agent adds that he is managing to maintain the same sales volumes as last year.

Natalia Capra France

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