EU steel industry calls for policy clarity amid weak demand, CBAM uncertainty
Market participants gathered in Luxembourg at the 75th Anniversary conference of European steel distributor association EUROMETAL July 3 voiced growing frustration with the pace and predictability of European steel policy.
As the region struggles with weak demand, rising regulatory burdens, and ongoing uncertainty around the Carbon Border Adjustment Mechanism, or CBAM, participants warned of over-regulation and inadequate protection for the downstream sector.
The mood at the conference was one of cautious realism, with calls for decisive EU action on trade defense and decarbonization targets amid volatile prices and geopolitical risks.
CBAM rollout raises concerns over cost visibility, compliance
While many agreed CBAM is structurally important to Europe’s climate ambitions, traders and distributors expressed concern over the current lack of clarity around emissions benchmarks, pass-through costs, and the long-term financial burden on supply chains.
“Right now, nobody can make estimates about how much margins they will make once CBAM kicks in,” a Germany-based distributor told Platts, part of S&P Global Commodity Insights, on the sidelines of the event. “It could vary by as much as Eur100/mt, which makes planning extremely difficult.”
Participants noted that downstream buyers, particularly in sectors like automotive and white goods, are asking for fixed prices but are unwilling to absorb potential CBAM-related volatility. Several speakers highlighted the danger of delivery slipovers into the first quarter of 2026 — when full CBAM cost implications are expected to materialize — forcing buyers to pay unexpected premiums.
Platts assessed Northwest European hot-rolled coil (HRC) at Eur555/mt ex-works Ruhr on July 3, and Southern European HRC at Eur540/mt ex-works Italy.
Distribution demands stronger role in policy
A Germany-based service center source warned that overregulation and indecision are damaging confidence in Europe’s ability to execute its climate and trade goals.
“Sometimes we just need a yes or no on the regulatory side,” he said. “CBAM doesn’t help in its current form, and 80%-90% of this industry is built on small and medium enterprises that can’t manage this uncertainty alone.”
Other distributors echoed this sentiment, arguing that while green steel presents real decarbonization potential, customer demand remains weak due to unclear value perception and the absence of downstream incentives.
“Increasing steel prices by 50% would only raise the price of a car by 0.6%, but reduce emissions by over 20%,” a buyer source told Platts on the sidelines. “Yet nobody’s paying a premium unless they see utility in the final product. The state needs to step in with tools like subsidies or green procurement rules.”
Participants noted that downstream buyers, particularly in sectors like automotive and white goods, are asking for fixed prices but are unwilling to absorb potential CBAM-related volatility. Several speakers highlighted the danger of delivery slipovers into Q1 2026 — when full CBAM cost implications are expected to materialize — forcing buyers to pay unexpected premiums.
Market players warned that existing safeguard mechanisms are inadequate to defend against underpriced imports.
“We need to move beyond crude safeguards,” another distributor told Platts. “We should start protecting semi-finished and downstream products that are 100% steel, like clutch plates.”
Many distributors are relying on large trading firms to calculate CBAM and landed costs for imports.
“We’re outsourcing the compliance burden, but it comes at a price. We need Delivered Duty Paid (DDP) prices that include the cost of CBAM,” the sources said.
Fragmented Europe, global competition
Luxembourg Prime Minister Xavier Bettel addressed the event, warning of growing global instability and Europe’s reliance on external partners.
“We rely on America for security and Russia for gas,” he said. “China’s oversupply is a major threat — and the EU must start acting more like a unified bloc.”
Several participants referenced Ilva and the failed sale to Liberty as an example of Europe’s fragmented approach.
“We don’t have strong regional champions,” the prime minister said. “We have too many mid-sized players trying to compete globally.”
European mills emphasized the need for a clear industrial policy to rival US support mechanisms.
“We export 90% of our scrap. The US has used policy to revitalize crude steel — we can do the same,” a mill source said. “CBAM should protect products made with EU steel, not just steel itself.”
Sentiment remains steady, but outlook clouded
Despite weak order intake and summer slowdown trends, most sources said current business levels were not catastrophic.
“Volumes are down 2%-3% from last year, but it’s not all bad,” the buyer source said. “The real issue is confidence and long-term visibility.”
A sense of realism pervaded the event, with broad consensus that if the EU wants to maintain its industrial base, it must back it with clear regulation, financial support, and pragmatic trade defense.
