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.”
