The company was achieving this despite a challenging environment marked by volatile energy prices, transport bottlenecks, tightening scrap supply and limited backing from governments and customers, he said during the Wire and Tube trade fair in Düsseldorf on April 13-17.
“Every day is a strong test. Every day is a battle,” Reinecke said of the challenges facing the company daily.
Energy-driven cost pressure
Of all the challenges, cost pressures have intensified most sharply in recent months, with energy emerging as one of the most critical issues. The escalation of geopolitical tensions in the Middle East has fuelled volatility in global gas, fuel and electricity markets. This was pushing up energy prices across Europe and putting further strain on steelmakers such as Feralpi which use electric-arc furnace (EAF) processes.
“We have three main costs,” Reinecke said. “The cost of scrap, the cost of energy, and then comes the personnel cost. Personnel costs are in third place.”
According to Reinecke, before the current US-Iran conflict began, gas prices in Germany were around €32 ($38) per MWh, but jumped to €45 ($53) per MWh the day after hostilities began.
“We are seeing a rise in natural gas prices of more than 30% while electricity prices increased significantly because, in Germany, power prices are still mostly defined by margin prices of fossil fuel power production,” he added.
Feralpi and other member companies of Germany’s national steel industry association asked government to fix a target power price at €50 per MWh, which would be equivalent to €0.05 per kWh.
“But when I look at my calculation, it depends on the daily prices,” Reinecke said. “With all the additions under German regulations, I come to €0.08-0.09 per kWh. The difference to the target price is €0.03-0.04 per kWh, and it varies daily, depending on the actual day-ahead prices.”
Even when avoiding peak-hours energy prices, which is the benefit of EAF-based production, in reality, German producers have only one option, which is to pass higher costs to customers.
“With an EAF, we are able to react very quickly – to stop the furnace or to switch it on,” Reinecke said.
Logistics as a bottleneck
Transportation was another bottleneck issue for German producers, with the availability of trucks being low and fuel costs rising.
“We have a lot of transport companies, with trucks, which have gone out of business in the past few years. A lot of company owners [in the haulage sector] have grown older and cannot find young people to continue the business,” Reinecke said.
In such difficult conditions, steelmakers need to think for themselves. Currently, Feralpi has 21 trucks and intends to expand its fleet to 35 trucks, according to Reinecke.
Meanwhile, the war in the Middle East has made fuel costs rise, resulting in increased transportation costs.
Scrap supply risks increase
Germany’s ferrous scrap market has come under increasing pressure in recent months, with prices rising sharply since the end of 2025.
According Reinecke, scrap prices have risen by around €40-50 per tonne since December, adding to the cost pressures already created by higher energy prices.
Despite the price increase, Feralpi believed that scrap availability in Germany has not yet become a critical issue. The bulk of supply continues to be sourced domestically, with around 70% of scrap used by German mills coming from the local market. The remaining volumes were imported mainly from neighbouring countries such as Poland, the Czech Republic and Slovakia.
Nevertheless, securing enough material at workable prices was described as a regular monthly challenge, particularly while Feralpi looks to ramp-up production.
“We produce 1 million tonnes [per year] of steel and you need 1.1 million tonnes [per year] of scrap for that,” Reinecke said. “We want to increase our steel production over the next two years to 1.3 million tpy because we have a second rolling mill. So it’s a big job to get enough scrap at fair prices. It’s always a fight for our director in the scrap purchasing team every month to get the right prices and the quantity we need.”
Looking ahead, concerns were growing about medium- to long-term scrap availability while Germany’s steel industry accelerates its transition away from blast furnace operations. Major flat steel producers were investing in direct reduced iron (DRI) plants and EAFs, a shift that will substantially increase demand for both scrap and electricity.
“We have four large steel producers in Germany,” Reinecke said. “Thyssen[krupp], Salzgitter, Saarstahl and ArcelorMittal. They work with blast furnaces [at the moment] but they are moving in our direction – building EAFs and DRI modules, with plans to use hydrogen. So they will need more electricity and scrap in the future, which will be a challenge to existing EAF based producers.”
The subject of scrap exports was also unresolved. Feralpi argues that more scrap should stay within Europe, to support decarbonization efforts, but there were currently no binding regulations to restrict exports.
While the topic was being debated at both national and EU level, Feralpi acknowledged that any regulatory changes were likely to take time due to the complexity of the legislative process.
“The discussion started in Berlin with the economy ministry, as well as in Brussels [at the EU], but there’s a long way [to go to reach] an agreement… because it’s very bureaucratic,” Reinecke said.
At the same time, external factors could indirectly ease European scrap tightness. Potential lower steel production in Turkey, driven by issues related to the EU’s Carbon Border Adjustment Mechanism (CBAM) and safeguard measures, could reduce Turkish scrap demand, potentially leaving more material available for European buyers.
But Feralpi believed that this alone was unlikely to fully offset the rising structural demand for scrap within the EU.
Demand outlook improves, but green steel premiums remain elusive
According to Reinecke, construction steel demand in Germany was expected to be favorable over the next few years owing to housing infrastructure and development projects.
“There are not many investments in industrial buildings construction in Germany,” he said. “But in the area of Dresden, we have an exception because there is some construction going on. And we are only 30km from Dresden.”
In addition, Dresden was set to become a local hub for semi-conductor production, with TSMC, Infineon and Global Foundries building new capacities in that area.
“My colleagues from the sales department are cautiously optimistic for the next few months, and for the summer,” Reinecke said.
Feralpi expected demand in 2026 to recover compared with 2022-25, when Germany’s steel industry capacity utilization rate dropped by 10-20% after the war in Ukraine began.
At the same time, Reinecke noted that even though demand for steel with low CO2 emissions was rising in Germany, customers were not ready to pay any premiums for it.
“I think, in the construction steel sector, we have one of the lowest emissions [rates], with less than 0.4 tonnes of CO2 per tonne of steel under Scope 1, 2 and 3. And our new spooler product in Riesa has 0.3 tCO2e per tonne of steel, as we seek to purchase green energy to use more electricity, not gas, and to optimize production. But our customers will not pay even a €10 per [tonne] premium for this,” Reinecke said.
“It is important for our customers to buy more green steel because the target for CO2 reduction will go up next year [in Europe],” he added. “But it’s impossible to improve production without financial support from the state. There must be a push from the government.”
Unlike the giant companies in flat steel production, he said, Feralpi “does not have massive financial support from the state.”
“For our transition to steel production with a lower carbon footprint,” Reinecke said, “we invested more than €220 million [$258 million] in our rolling mill in Riesa.”
