“European steelmakers are at a crossroads, facing the challenges of necessary decarbonization and partly unfair global competition,” Ursula von der Leyen, EU Commission president, said on Tuesday. “Today’s dialogue is intended to lead to a tailored plan to help this sector decarbonize and thrive globally.”
Following the start of the dialogue with key steel industry leaders and stakeholders on Tuesday at an event called the “Summit on the Future of the European Steel Industry”, the EC will present its Action Plan on Steel and Metals on March 19, it said.
The long-awaited action plan will have to outline sector-specific steps to replace the trade defense safeguard measures expiring in June 2026, according to the EC. It will also ensure that clean steel production is commercially viable, find the best response to unfair trading practices, and identify long-term measures that could best replace the existing safeguard measures.
The action plan on steel is part of the EC’s Clean Industrial Deal, which was published on February 26 to a tepid industry reaction.
In November 2024, European steel industry association Eurofer demanded that policymakers develop such a plan to avert a massive crisis in the European steel sector.
European steel market facing crisis
The European Commission added that the local steel sector has been facing critical challenges.
“Production costs have increased due to high energy prices, while product prices have dropped due to increasing global non-market overcapacity and decreased demand,” it said. “Consequently, the sector could not invest in clean steel, which is needed for the decarbonization of this industry.”
A decline in the value of European steel products over the past 12 months can clearly be seen in Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, which averaged €608.04 ($635.43) per tonne in February, compared with €738.28 in February 2024.
Despite the positive trend seen in European HRC prices since the beginning of this year, the average price still lags on an annual comparison.
Europe’s steel sector remains at the heart of many regional economies, with approximately 500 production sites across 22 EU Member States, the Commission said. According to EU data, the European steel sector contributes around €80 billion to the EU’s gross domestic product (GDP) and supports more than 2.5 million jobs.
But declines in production volumes over recent years were also clear to see in the data. Steel production in the EU-27 was 129.50 million tonnes in 2024, according to the World Steel Association. Although this total was up by 2.6% from 2023, it was still down by 15.1% from the 152.50 million tonnes made in 2022.
Commercial viability of green steel production
Currently, 60% of the steel in Europe is produced using the integrated blast furnace/basic oxygen furnace route (BF-BOF).
In the past few years, however, European steelmakers have been investing heavily in green steel production, focusing on replacing carbon-intensive BF-BOF with electric-arc furnaces (EAFs) and direct-reduced iron (DRI) modules, fuelled by hydrogen.
But the market fundamentals in Europe have not been favorable toward green investments recently, Fastmarkets understands.
Indeed, at the moment, using hydrogen with existing DRI modules in Europe would be too expensive to be competitive, with hydrogen prices around €5-8 ($5-8) per kg.
A trade source in Northern Europe pointed out that the price of hydrogen should be “around €2.50-3.00 per kg, to make it commercially viable for steelmaking.”
Around 140,000-150,000 tonnes per year of hydrogen would be required to fuel a single 2 million tpy DRI module, a mill source told Fastmarkets.
The entire shift to greener methods of production would require huge investment. According to Eurofer, the capital and operating costs of the green transition would be “extreme… in the multi-billion-euro range,” and that, per tonne of steel produced, costs could go up by between 35% and 100%.
Sufficient green hydrogen and renewable energy supply to produce green hydrogen at competitive prices is therefore crucial for the European steelmaking decarbonization journey, Fastmarkets understands.
The European steel sector will require an additional 400TWh of CO2-free electricity by 2050, which would be about seven times the amount of energy that the sector currently purchases, according to estimates from Eurofer.
Meanwhile, willingness to pay premiums for green steel among European buyers remained low, so it was difficult for steelmakers to offset the high costs of production.
Green steel produced in European EAFs – with Scope 1, Scope 2 and upstream Scope 3 greenhouse gas emissions below 0.8 tonnes of CO2 per 1 tonne of steel – has been on offer at premiums of €200-300 per tonne in March.
These offers have been broadly stable in recent months, but tradable values for the spot market were lower, industry sources said.
Notably, buyer sources estimated that the achievable premiums for green steel with that level of emissions would be closer to €150-170 per tonne.
Some buyers were placing bids for such material at €70-80 per tonne, but suppliers said that such prices would only be acceptable for steel produced with higher CO2 emissions content.
Fastmarkets’ weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €150-170 per tonne on February 27, stable week on week.
The economic slowdown in Europe — notably the downturn across key steel-using sectors, such as automotive and construction — weighed on the green steel market as well, slowing the uptake of decarbonized products, market sources said.
“It is critical that we see progress in 2025 both in providing necessary emergency relief and creating a policy environment that incentivizes the investment required to accelerate decarbonization in Europe,” ArcelorMittal’s chief executive officer Aditya Mittal said in a press release on February 7, which accompanied the company’s fourth-quarter financial results.
“The effect of energy prices and also the cost of steel within the green transformation is one of the key issues,” the president of European steel distributors’ association EUROMETAL, Alexander Julius, said in statement seen by Fastmarkets. “The distribution of green steel will be working… if we make green steel, put a label on it and make it part of public procurement.”
Eurofer satisfied with start of strategic dialogue
Eurofer expressed its satisfaction with the launch of the strategic dialogue on steel in a statement distributed on March 4.
“We are grateful that the Commission, at the very highest level, not only recognizes these challenges but wants to work with our industry to find the right solutions,” Eurofer director general Axel Eggert said.
“We’re looking forward to seeing these solutions reflected in proposals and legislation, starting with the forthcoming Steel Action Plan and the revision of the EU steel safeguards by April 1,” he added.
Eurofer repeated its position that there were four priority areas for the steel sector that required urgent action – stringent trade measures, adjustments to the Carbon Border Adjustment Mechanism (CBAM), providing affordable energy for industry, and retaining European ferrous scrap resources.
The association outlined these challenges in a statement related to the Clean Industrial Deal [LINK], announced by the European Commission on February 26.
But Eurofer was dissatisfied with the measures in the deal, saying that the European Commission had managed to outline the right challenges, but had proposed only incomplete measures to resolve them.
Amendments to the CBAM were also part of the announced Clean Industrial Deal.
But Eurofer argued that the revision of key elements critical to CBAM’s effectiveness – for example, exports, circumvention, resource shuffling, downstream sectors, etc – was confined to an excessively lengthy timeframe, with no legal certainty about the solutions.
“A review is urgently needed now, with measures to close loopholes well before 2026,” Eurofer said.
Possible EU scrap restrictions
On steel scrap, Eurofer wished to “retain this valuable yet scarce resource in Europe to support circular economy targets, industrial decarbonization, strategic autonomy and energy security,” it said.
This was not the first time that Eurofer has expressed a desire to consider scrap export restrictions from Europe. For example, in January 2023, it called for ferrous scrap to be added as a critical commodity under the EU’s upcoming Critical Raw Materials Act (CRMA).
Decarbonization efforts, and the move toward more EAFs, meant that ferrous scrap would be increasingly important to European steelmakers in the next decade, market participants believed.
But European scrap supply currently exceeds domestic demand, meaning that the EU is the world’s largest exporter of steel scrap. Turkey, Egypt and India were the largest buyers.
The EU-27 registered a 9.6% year-on-year decline in its overseas steel scrap shipments, to 12.44 million tonnes, in the first nine months of 2024, but retained its position as the world’s top exporter, according to data compiled by the Bureau of International Recycling (BIR).
The export of some EU steel scrap products was already under threat from the revamped EU Waste Shipment Regulation, which seems likely to restrict exports of material classified as “waste” to non-compliant nations outside of the Organisation for Economic Co-operation and Development (OECD).
But exports to major buyer Turkey, for example, would be unaffected by the new WSR because that country is an OECD member.
The BIR and the European Recycling Industries’ Confederation (EuRIC) expressed dismay “over the conclusions reached during the Summit on the Future of the European Steel Industry held in Paris on February 27, 2025.”
In a statement, BIR and EuRIC argued that there was no shortage of scrap in the EU and that additional trade restrictions would harm European industry and the environment.
Furthermore, it said that “cutting off access to European recycled steel would force many global producers to revert to more carbon-intensive BF-BOF production, dramatically increasing global emissions and openly contradicting Europe’s climate-leadership ambitions.”
