European steelmakers have brought back around 10 million tonnes of crude-steelmaking capacity this year, according to EUROFER’s 13 October announcement. The association credits the tighter EU import regime with improving the conditions for production and investment.
Restricting imports can redirect orders towards European mills while overall steel consumption remains weak. For manufacturers buying that steel, however, higher material costs can make their own products harder to sell.
Returned capacity has yet to produce an aggregate recovery
EUROFER reports €3.4 billion in investment decisions during 2026, with another €2.4 billion expected by year-end, and estimates that the capacity restarts help preserve up to 80,000 jobs across the value chain. The investment figure concerns decisions, while the employment figure is an estimate of jobs preserved. Neither represents completed capital spending or newly created jobs.
Worldsteel’s newer production release, published on 23 October, puts EU crude-steel output at 94.5 million tonnes in January–September, down 0.8% from a year earlier. September alone was down 5%. Individual furnaces can return while output falls elsewhere, and the annual capacity of a restarted unit says little about how intensively it subsequently operates.
EUROFER’s October outlook reports capacity utilisation of 67%, against 65% in 2025. Higher utilisation spreads fixed costs over more tonnes when output increases, although removing capacity can also raise the ratio. The longer contraction has included permanent changes: ArcelorMittal closed primary steelmaking at Kraków in 2020 while retaining its rolling and coating operations, supplied mainly with slabs from Dąbrowa Górnicza. A reduction in local ironmaking can therefore coexist with continued downstream production.
Imports can retreat before final demand returns
The steel trade measure applying since 1 July permits about 18.3 million tonnes a year to enter under tariff-free quotas, with a 50% duty above the applicable quota. It covers specified steel products and origins rather than every tonne of imported steel. The OECD projects global excess steelmaking capacity of 745 million tonnes in 2028, providing a supply-side explanation for sustained competitive pressure on European mills. EUROFER reports that imports rose 14% in 2025, followed by a decline in the first half of 2026, before the new regime took effect.
CBAM works through a different cost. It prices the embedded emissions of covered imports, with adjustments for continuing EU free allocation and qualifying carbon prices paid abroad. Lower-emissions imports can consequently face a smaller carbon bill, while the quota duty does not reward a cleaner production route. The quota duty can consequently outweigh a low-emissions foreign mill’s carbon-cost advantage.
The latest coil market illustrates the distinction between stronger pricing and stronger consumption. McCloskey’s report for the week to 23 October, republished by EUROMETAL on 26 October, puts Northwest European hot-rolled coil at €760 per tonne ex-works, up €10 on the week. It also describes limited trading and prolonged destocking after distributors cleared material ahead of July’s tighter quotas. Mills can obtain higher prices as imported alternatives become less attractive, even while distributors sell down existing stocks.
Demand forecasts remain subdued. EUROFER expects apparent steel consumption to grow 0.1% in 2026; worldsteel’s later October forecast puts it down 0.3%, followed by a 3.1% recovery in 2027. Worldsteel also attributes part of 2025’s stronger consumption to stockbuilding before CBAM. Orders brought forward into warehouses can leave a weaker replenishment market afterwards.
More vehicle sales do not guarantee more European steel orders
ACEA’s first-half figures provide a useful example. EU car registrations rose 5.7%, but EU car production fell 0.4%, while car imports increased 16.1% by volume and exports fell 5.9%. A recovering sales market can therefore support assembly and steel demand outside Europe without generating equivalent orders for European mills.
Construction offers a more encouraging but uneven signal. Eurostat reports EU civil-engineering activity up 2.8% year on year in August, while construction of buildings fell 4.1%. Infrastructure work can support steel demand while weak building activity continues to constrain other products. European machine-tool production, meanwhile, fell 8.6% in 2024, followed by an estimated 6.6% contraction in 2025, according to CECIMO and Orgalim.
For steel users, purchasing power also depends on the material price. As an illustration, a 10% steel-price increase means an unchanged steel budget buys 9.1% fewer tonnes. A manufacturer that cannot recover the additional cost through its selling price absorbs it in its margin, potentially reducing the cash available for equipment and expansion.
Extending CBAM to finished goods could reduce the carbon-cost difference between European fabrication and competing imports, but the proposed 2028 extension remains under negotiation. Manufacturers importing covered components could also pay more for those inputs. The same business can gain protection on its finished product and face a higher bill for its parts.
Investment needs competitive operating costs
ArcelorMittal confirmed a €1.3 billion electric-furnace investment at Dunkirk in February. Its announcement linked the project to anticipated trade and CBAM changes, a long-term electricity agreement with EDF and funding support covering 50% of the investment through France’s Energy Efficiency Certificates mechanism. That decision preceded July’s implementation and depended on several conditions together.
Electricity remains a substantial constraint. The International Energy Agency estimates that EU electricity prices for energy-intensive industries in 2025 were roughly twice US levels and more than 50% above China’s. Electrifying steelmaking changes the fuel and emissions profile, but exposes operating margins to the cost of power. A grant can reduce the initial investment without eliminating that recurring difference.
Public funding also has different contractual terms. Germany’s support approved for thyssenkrupp in 2023 includes a mechanism to recover part of the aid if the project generates extra net revenues. The public contribution can therefore depend on a project’s subsequent revenues as well as its initial funding agreement.
Foreign competition is not uniformly free of support either. The OECD finds that the median Chinese steel firm received 15 times more subsidies relative to its assets than the median firm elsewhere in 2024. Its research also finds that subsidies can expand market share without improving productivity or cost efficiency. A producer can gain orders through financial support while its production costs remain uncompetitive.
Export orders and scrap economics remain exposed
EU steel exports fell by 9 million tonnes between 2018 and 2025, according to EUROFER, and declined another 20% year on year in the first half of 2026. More orders inside the EU can support mills, but those gains do not remove their energy and production-cost disadvantages when competing in third-country markets.
Scrap creates another distributional issue. Export restrictions, if imposed, could reduce some mills’ feedstock costs while lowering recyclers’ sales revenues. A 2025 study presented by EuRIC and BDSV warns that weaker recycling incentives and reduced access to high-quality imported scrap could offset part of that benefit. More scrap retained in Europe would not automatically provide the grades needed for demanding flat-steel applications.
Returned capacity, investment decisions and infrastructure demand support a recovery, but aggregate steel output and exports remain weak. Automotive trade already demonstrates that stronger European sales can be supplied increasingly from abroad. A mill gains little lasting demand from replacing imported coil if the European factory that buys it subsequently loses the finished-product order.
