There are three possible solutions to Europe’s steel industry woes, Laplace Conseil founder, consultant Marcel Genet asserted at Kallanish Europe Steel Markets in Amsterdam this week.
The main problem is that Europe’s steel industry is currently facing overcapacity and falling exports.
Genet said that Europe, including the EU, UK, Norway, Switzerland and the Balkan countries, produced 136.9 million tonnes of crude steel in 2024, with 55% and 45% respectively contributed by 29 BF-BoF and 132 EAF plants.
For the 29 integrated BF-BoF plants, the average capacity utilisation rate was only 62% in 2024, measured by the OECD based on its annual survey, and from capacity and production reported by mills.
“We keep talking about the excess capacity of Chinese steel and any other countries. We never talk about the excess capacity of Europe. Europe has the lowest level of capacity utilisation in the world,” Genet noted.
Rather than just blaming imports, and relying on government subsidies and trade measures, EU mills should invest into new technology. The three main options that steel mills are thinking about and taking action on are to replace BF-BOF with natural gas-based direct reduced iron-making, hydrogen-based DRI and scrap recycling through EAFs.
Unfortunately, Europe faces a very high price for natural gas, which is about ten times that in the Middle East, North Africa, the US, Mexico and Canada. Therefore, the EU cannot produce DRI to make steel competitively, Genet observed.
By contrast, producing fully decarbonised steel using scrap requires seven times less clean electricity than with iron ore and hydrogen.
For steel production, Genet forecasted the EU will reach 150mt by 2050, 10% more than in 2024. 70% of it will be contributed by EAFs using scrap, with the remainder to be shared equally by EAFs using hydrogen-based and natural gas-based DRI.
Genet also expects the last European BF will be extinguished in 20-25 years, ten years after the last one shuts down in North America.
