Increased market volatility and sharp global price swings are heightening uncertainty across the steel sector, according to Stemcor managing director Europe Julian Verden. However, European coil prices should recover during the second half of the year, supported by strong European trade protection measures.
There is “a massive amount of government interference,” Verden proclaimed at last week’s EUROMETAL 75th Anniversary conference in Luxembourg attended by Kallanish. “This is making the scope in which we have to work very, very difficult.”
Safeguard measures remain opaque, and the absence of real-time data continues to create uncertainty over when goods can be cleared through customs, he continued. The imminent confluence with Carbon Border Adjustment Mechanism (CBAM) regulations is only adding complexity. While these protective mechanisms are intended to shield Europe’s industries, they have instead imposed heavy financial burdens on businesses, undermining profitability and stifling investment.
Verden expects a sharp uptick in hedging activity across multiple segments, including iron ore, freight, steel, and carbon credits, as firms look to manage mounting volatility.
There is “enormous growth” of capacity in China, he added. Crude steel output in the country fell just 1.7% year to date through May, amounting to 431 million tonnes. Full-year production is forecast to edge just below 1 billion tonnes, a marginal 1% annual drop.
This is not enough to stop China’s increase in exports. Chinese steel exports are on pace to exceed 120 million tonnes in 2025, a volume Verden calls “far too much material spurting onto the market.” This flood is distorting global pricing and disrupting supply chains.
Year to date, over 40.47mt have already left Chinese ports. This export boom buys short-term relief for Chinese mills but creates global price pressure. Without a recovery in domestic demand, China faces a potential structural reckoning, Verden noted.
A global reallocation of steel production capacity is underway, with a major shift from the traditional leading producers such as China, the US, Europe, and Japan, towards India.
Despite persistent raw material constraints, India is positioned to double its capacity to 300mt in the coming years. India has produced over 67mt of steel year to date, marking a modest, 0.2% year-on-year increase. Meanwhile, first-quarter GDP growth reached 7.4% year-on-year, underscoring macroeconomic resilience. However, the ramp-up in domestic steel production may act as a drag on prices.
The US economy is outperforming many of its global competitors, but steel consumers, particularly major North American users and manufacturers, face significantly higher input costs. These buyers are paying 30-40% more for steel in the US market, a price differential that is unsustainable over the long term, Verden observed.
Unlike in Europe or the UK, where imports are diversified across numerous origins, US tariffs create a more insulated and constrained market.
“We do have a strong local steel industry [in Europe], but that has to be efficient, that has to be managed and invested in,” Verden commented. Trade barriers ultimately undermine long-term investment and are inflationary, raising input costs, pushing up producer prices, and contributing to elevated interest rates. Without coordinated policy alignment between the European steel industry and government stakeholders, the sector risks falling behind, Verden concluded.
Natalia Capra France
