Market participants at EUROMETAL’s Steel Trade Day in Düsseldorf warned that Europe’s steel supply chain is entering a period of heightened uncertainty, as weak demand coincides with the rollout of a new trade regime and lingering ambiguity around the Carbon Border Adjustment Mechanism.
From service centers to international traders, the tone at the event on Dec. 4 reflected a cautious reassessment of Europe’s competitive position, with many noting that the region risks tighter supply, higher volatility and reduced visibility heading into 2026.
New TRQ system seen as structurally tighter
A large portion of the discussion at the event focused on the EU’s forthcoming trade defense architecture. A permanent TRQ system featuring a 50% out-of-quota duty, double the current safeguard rate. According to multiple speakers, the structure could reduce available import volumes by more than 40% compared with 2024 flows for flat products.
“The numbers are brutal,” one trade-policy consultant said. “Quotas will be tight, frontloaded and likely exhausted almost immediately. Smaller importers will struggle to survive.”
Participants noted several operational challenges, including, uncertainty around country allocation, with China, India and Indonesia unlikely to receive specific quotas initially and possible exemptions for Ukraine on security grounds.
Many expect firms to stock-build into mid-2026, anticipating higher landed costs once the new regime takes effect.
Supply chain warns of unquantifiable risk
Across panels and bilateral meetings, participants stressed that they cannot accurately calculate risk under simultaneous CBAM and TRQ reforms.
“Right now, no one can forecast exposure for 2026, not even for next quarter,” a Germany-based distributor said. “Financing is harder, customers want fixed prices, and nobody wants to take the CBAM liability.”
A Turkey-based mill source said uncertainty was causing exporters to reassess the EU as a core market.
“We are 70% export-focused and theoretically CBAM-favourable because we are mostly EAF,” the source said. “But we cannot compete with China, which is more than $200/mt cheaper. Until we have clarity, we are looking more at the US and North Africa.”
Importers also highlighted the cash-flow burden of CBAM compliance.
“Even if you pass the cost on, the importer is the one financing the payment upfront,” a source said.
Demand remains stagnant
Market sentiment pointed to demand that is stabilizing at low levels but has not yet recovered meaningfully. Several participants described a “wait-and-see” approach from both buyers and service centers.
“Demand hasn’t bottomed yet, OEMs are still weak,” the trader said. “Everyone is operating in a ‘do nothing until next year’ mode.”
Service centers said order intake remained modest, while rising price-risk exposure has led to shorter contract cycles and reduced stockholding across the distribution sector.
Platts assessed Northwest European hot-rolled coil at Eur610/mt ex-works Ruhr on Dec. 4, stable day over day.
Calls for realistic policy as volatility grows
Speakers at the event urged policymakers to align decarbonization and trade strategies with market realities, warning that fragmented regulation risks further weakening the region’s industrial base.
“Asia is not staying dirty; they are building green steel faster than Europe thinks,” a policy expert said. “If we want green transformation, we need incentives like green public procurement and clear benchmarks.”
Others warned that the combined pressures of rising costs, higher bureaucracy and reduced competitiveness were pushing European companies toward specialization or consolidation.
“The EU is still an attractive import destination, but our own industry is in structural decline,” one distributor said. “Without clearer rules, this volatility becomes permanent.”
Imports remain competitive despite policy headwinds
Several market participants told Platts, part of S&P Global Energy, that imports continue to set the price floor in Europe, even as CBAM reporting obligations expand and new permanent tariff-rate quotas move closer to implementation.
A service center source, sourcing 80%-85% of its volumes from imports, said Turkish and Asian material remains comparable to the Northwest European domestic supply.
“Even with CBAM, imports are still competitive. Safeguards are the real problem, though,” the source said, noting Northwest European HRC at around Eur600/mt ex-works, compared with Asian-origin HRC at Eur560-580/mt DDP including CBAM.
Some buyers echoed this view, pointing to Eur760-780/mt domestic CRC offers in Spain and warning that shrinking domestic order books were intensifying competition among service centers.
“The environment is very hard to operate in. Everyone is fighting for the same limited volume,” a trader said.
A Germany-based trader added that CRC availability from overseas has tightened considerably. “There are no import CRC offers right now,” the source said. “It’s a very tight market.”
