In a statement released on the same day, Eurofer highlighted what it believed to be the dire situation facing the region’s steelmakers, citing massive production cuts, plant closures, and a significant downturn in market conditions.
The association is calling for urgent and comprehensive measures to safeguard the competitiveness of the region’s industries and the sector’s green transition.
Steelmakers slash production, put green investments on hold
Eurofer’s concerns come after recent announcements from some of Europe’s largest steel producers.
Germany’s Thyssenkrupp, that country’s largest steelmaker, revealed plans to slash its steel output by 2.7-3.0 million tonnes per year due to rising production costs, increased pressure from steel imports from Asia, and a persistent imbalance between supply and demand
The company also confirmed the closure of its steel processing facility in Kreuztal-Euchen, which specializes in coil slitting, coating and pickling operations.
These moves were expected to lead to the loss of thousands of jobs in the steel sector.
In a similar move, ArcelorMittal, the world’s second-largest steelmaker, has announced that it will be putting its decarbonization plans on hold due to unfavorable market conditions
The company cited concerns over the high cost of green steel manufacture and weaknesses in Europe’s Carbon Border Adjustment Mechanism (CBAM), which would impose tariffs on carbon-intensive imports.
Declining steel consumption and capacity utilization
In light of the production cuts, Eurofer has downgraded its outlook for steel consumption in the EU’s 27 member states (EU27) for 2024, now forecasting a 1.8% reduction in demand instead of the slight recovery it predicted previously.
The association also said that EU steel production has plummeted by 34 million tpy since 2018, falling to 126 million tpy in 2023, with imports now accounting for 27% of the market share.
And it added that capacity utilization has dropped to 60% of what it was, signalling an unsustainable underutilization of Europe’s steel infrastructure.
According to the OECD, the nominal crude steelmaking capacity in Europe was more than 200 million tpy, but actual output volumes have been lagging far behind that figure in recent years.
Global steel overcapacity and competitive pressures
Eurofer’s director general, Axel Eggert, pointed to the increasingly important issue of global steel overcapacity, particularly in regions such as China and the US, which benefit from more favorable production conditions.
World crude steelmaking capacity in 2023 was estimated at 2.439 billion tpy, exceeding production by 552 million tpy, according to the OECD.
And the OECD expected an additional 157 million tpy of carbon-intensive capacity to be online by 2026.
Urgent call for action
Eggert emphasized that, without immediate action from the EU and its member states, Europe’s manufacturing base could disappear entirely.
He warned that the decline of the steel sector would have a cascading effect on other vital industries, such as the automotive sector, renewable energy, and battery production.
“How many more plant closures, job losses, and stalled decarbonization projects will it take before the EU and Member States wake up?” Eggert asked.
To address these challenges, Eurofer is calling for a European Steel Action Plan that includes swift and effective measures on key issues such as trade, the CBAM, energy prices, and steel scrap availability.
The association stressed that incremental improvements would not be enough to counteract the fundamental challenges of global overcapacity and high energy costs, which were driving Europe’s steel sector into decline.
Published by: Julia Bolotova, Holly Chant
