Members of the association for European steel distributors at the event focused on whether a reduction in imports would help drive a recovery in domestic flat steel prices, what the impact of recessionary forces might be on the green steel transition and whether the EU’s Carbon Border Adjustment Mechanism (CBAM) will be beneficial or just create more red tape.
The role of imports
Markets participants said the recent toughening of trade defence measures, including a steel safeguard review and an anti-dumping investigation into hot-rolled coil imports from Japan, Vietnam, India and Egypt are likely to result in a stronger reliance on domestic supplies, and that should support a recovery in domestic flat steel prices in Europe.
The European Commission launched an anti-dumping probe against HRC imports from the four countries in August.
But sources at the event said that any price recovery would not last long unless it is supported by an increase in consumption.
“These trade barriers create additional uncertainty which is not encouraging demand [for imported steel], so we can expect more demand for EU-made steel and it’s safer [to book European steel],” Eusider Trading chief executive Marco Miccichè said during a panel discussion.
And Macrometal managing partner Alexander Julius said: “It’s all about [steel] availability. It’s an issue for import steel buyers in Europe that they don’t know the potential extra costs they might be facing by the time [any steel is imported].
“The first quarter [of 2025] might be a bit early [for flat steel prices to recover], but [later in the year] we will see better prices, in view of the reduced imports and reduced availability,” he added.
European flat steel producers recently started to increase prices for coil with delivery in the first quarter of 2025. Notably, for January-delivery HRC, steelmakers are aiming for €600-620 ($654-676)) per tonne ex-works, or even €640 per tonne ex-works in some cases, sources said – although these prices have yet to be accepted in deals.
“It’s tough to increase [steel] prices against the very low consumption [we are currently seeing],” Primex Steel Trading managing director Maruan El Daghma said. “And I don’t see consumption increasing in the next couple of months, so it will be difficult for the EU mills to increase [steel] prices on a long-term basis.
“We might see a tick up because of availability issues, but will not be long lasting,” he added.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €556.67 per tonne on November 5, down marginally by €0.83 per tonne from €557.50 per tonne on Monday.
Green steel uptake
The European steel sector is going through the transition to green steelmaking, with several multi-billion dollar investment projects already announced and more than 50 million tonnes of new steelmaking capacity expected to come online in 2025-2027, according to Fastmarkets’ estimates.
Major flat steel suppliers are already offering their own green steel brands with lower carbon footprints – including XCarb, Arvzero, SSAB Zero, Bluemint, Greentec, but there is currently no common standard for green steel – although Fastmarkets’ methodology, however, defines European green steel as “steel produced with Scope 1,2 & 3 emissions at a maximum of 0.8 tonne CO2 per tonne of steel.”
Market participants said there was a lack of projects across Europe requiring green steel and that demand from the key consumer – the automotive industry – has recently been slowing, in line with the general downturn in steel sales.
“Our customers say they love green steel but they can’t pay more because they are fighting for their survival,” Julius said.
“We can’t reverse the decarbonization and reduced-CO2 steel is coming – it’s just the matter of time. But in a recession, it just becomes a secondary [issue] for a buyer,” he added.
Fastmarkets’ weekly price assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €100-200 per tonne on October 21, stable week-on-week.
Carbon Border Adjustment Mechanism
The EU’s CBAM regulation is one of the major drivers behind the decarbonization of steelmaking in the EU and globally. It’s a tool intended by the EU to put a fair price on the carbon emitted during the production of carbon-intensive goods that enter the trading bloc.
However, the complexity of CBAM poses certain challenges for steel importers and brings additional costs.
“Small and medium-sized steel importers are less concerned about CBAM certificate costs than about CBAM compliance costs – [such as] supplier communications, software, data verification, and so on,” Lars Hillmann, a lawyer at Graf von Westphalen (GvW) said during a presentation.
Sources told Fastmarkets that another problem related to CBAM is the fact that it does not take into account steel exports, thereby compromising European companies’ competitiveness in global markets.
“Export-oriented companies fear further competitive disadvantages in global markets [in terms of the non-repayment of CBAM costs for exports],” Hillmann said.
These issues might result in “lost added value” for the European manufacturing industry, he added.
And Importers might start avoiding importing goods covered by CBAM and instead buy “items with higher customs classification” instead of semi-finished products.
“Instead of bringing the steel, say, from Asia and processing it in the EU, we [will instead] buy the ready steel structure, free of quotas, free of the anti-dumping [duties] and [free from] CBAM. That means that all the added value for Europe is gone,” a trading source told Fastmarkets on the sidelines of the event.
The European Commission is investigating the potential extension of CBAM to products downstream of the goods subject to the current regulations, such as iron and steel, but a final decision has yet to be made.
Capacity versus actual output
Sources at the Dusseldorf event estimated that the nominal crude steelmaking capacity in Europe is well over 200 million tonnes, but the actual output volumes have been lagging far behind that in rencent years.
In 2022, crude steel production across Europe amounted to 136.30 million tonnes, down from 152.60 million tonnes in 2021, according to data from the World Steel Association (worldsteel). The decline was due to massive output cuts that were implemented by European mills in the third and fourth quarters of 2022, due to deteriorating demand and falling steel prices.
In 2023 steel output fell further still, even considering the low comparative base of the previous year, amounting to 126.30 million tonnes, according to worldsteel.
“Steel production in Europe will be no more than 120 million tonnes [per year] by 2030,” a source told Fastmarkets on the sidelines of the event.
In 2023, steel production in Germany, which is the Europe’s largest steelmaker, fell to its lowest level since 2009 at about 35.40 million tonnes – down 3.9% year on year, amid challenging market fundamentals and high production costs.
And several market participants in Dusseldorf said this tendency was likely to prevail in the years ahead.
“We are heading toward a post-industrial society, with less steel needed in the upcoming years. [But the steel] industry is clever enough not to create overcapacity,” a mill source in Europe said.
“Steelmaking capacity massively [outweighs] actual production [in Europe and] is representative, in a way, of what needs to be done – shutting redundant capacity. EU capacity will be reduced – it’s as simple as that,” another source said,
Other market participants pointed out that the capacity of the new, green steel mills in Europe will be lower that the nominal capacity of existing BF-BOF mills, so will more reflective of the actual market needs.
