Crisis in the EU steel industry – politicians are intensifying efforts to help the sector
GMK Center
Ukrainian based consulting company with the focus on European steel market. News, market studies & sustainability issues
European steelmakers continue to lobby for the sector’s interests at the EU level. On October 23, the issue of the crisis in the industry, which has been publicly raised in recent months, was discussed during a plenary debate in the European Parliament.
In focus
The European steel industry considers the current period to be the worst for it since the financial and economic crisis of 2009 and insists that steps that could save the industry should be taken by the EU immediately.
During the plenary debate, MEPs discussed a number of issues that have been repeatedly pointed out by European steel associations.
In particular, they talked about the global steel excess capacities – last year they reached 551 million tons, which is four times bigger than the annual steel production in the EU. According to the OECD, another 157 million tons will be commissioned by 2026.
The role of China, which is responsible for half of global steel production, was also discussed. According to MEPs, due to weak domestic consumption, the country is flooding the world with cheap carbon-intensive steel products, which threatens local steelmakers’ incomes, jobs, and the environment.
Juan Ignacio Ziodo Alvarez (European People’s Party (Christian Democrats)), noted that China has increased steel production by more than 600% over the past 20 years and continues to expand. By 2026, production is expected to grow even more, reaching about five times more than the total production in Europe.
In addition, the issues of imperfections in the EU’s trade defense instruments, high energy prices, problems with the carbon border adjustment mechanism (CBAM), etc. were raised.
According to European Commissioner for Equality Helena Dalli, Europe currently accounts for only 7% of global steel production, European production volumes have fallen by 20% over the past decade, and the EU has moved from a trade surplus to a deficit of about 10 million tons of steel.
To reverse this trend, Helena Dalli said, attention should be focused on large investments in new green steel projects to allow Europe to regain its competitive edge in the global steel market.
The European Commissioner believes that domestically, it is necessary to provide the steel industry with electricity at competitive prices. On the external level, the EU must defend itself against cheap imports, which are the result of growing global overcapacity that puts pressure on prices and distorts the market.
According to Dalli, the EU will be working intensively in the coming months on structural solutions to be implemented before the expiration of protective import quotas in the steel market (June 30, 2026).
Kerstin Maria Rippel, Managing Director of the German industry association WV Stahl, said that the European Parliament’s discussions on the situation in the steel industry are an important signal at the right time, as they show that the EU is taking the problem seriously.
The day before, Axel Eggert, CEO of the European Steel Association (EUROFER), noted that the debate is important for raising awareness of the existential challenges facing the industry.
“What is at stake is not just steel or the steel business, but the very backbone of the EU economy and people’s livelihood,” he emphasized.
EUROFER is counting on the European Parliament, together with the European Commission and the bloc’s member states, to ensure that a robust steel action plan is developed and implemented as soon as possible.
A rescue plan
In an open letter published in mid-October, CEOs of companies representing the European steel industry listed a number of urgent measures to save the industry. These include
During the debate, MEPs agreed that a broad action plan was needed to ensure the viability of the steel industry. The proposals included the need to reduce steel imports and stricter application of safeguard measures (stricter country-specific quotas, anti-dumping and anti-subsidy processes), ensuring stable energy supply with possible public investment and funds from energy companies, and the last introduction of CBAM.
In addition, both steelmakers and MEPs are calling for a Clean Industrial Deal, which European Commission President Ursula von der Leyen promised to put forward before her re-election.
Speaking to the European Parliament in July, von der Leyen noted that the new Clean industry plan will help create green markets in everything from clean steel to clean technology, and it will speed up planning, tendering and permitting.
?We have to be faster and simpler. Because Europe is decarbonizing and industrializing at the same time,? she noted at the time.
The agreement should direct investments in infrastructure and industry, in particular in energy-intensive industries.
Ukrainian realities
If the European steelmakers managed to focus attention of politicians on problems of the industry, the Ukrainian steel sector continues to struggle with a number of problems to ensure the survival of the industry and its competitiveness.
With the beginning of the full-scale invasion of the Russian Federation, the steelmakers of Ukraine faced unprecedented challenges – the destruction, damage or capture of enterprises and the loss of a significant part of the export potential, the breakdown of logistics chains, the lack of personnel. Then there was a shortage of electricity caused by Russian attacks on the Ukrainian energy system. Electricity costs for enterprises increased due to the state’s requirements for a certain share of imports to ensure stable power supply. Price caps on electricity market were also risen.
Current problems of Ukrainian steel industry include the imperfect system of booking employees from mobilization and the lack of official communication on this matter, unfavorable conditions on the global steel market, and the strict fiscal policy of the state.
Enterprises that remain on the territory controlled by Ukraine currently produce approximately 60-65% of production from the pre-war level.
According to Oleksandr Kalenkov, the president of Ukrmetalurgprom OP, in 2024, provided the security situation is favorable, the country’s steelmakers can increase steel production by 17% compared to the previous year – approximately to 7.3 million tons. However, due to the deterioration of the situation in the Donetsk region, the possible loss of domestic coking coal supplies, the threat to the sea corridor and further attacks on the energy infrastructure steel production may drop significantly.
CBAM will be another challenge for the Ukrainian steel industry considering insufficient attention of the authorities to this issue. The war does not allow Ukrainian steelmakers to invest in the green transition, although large companies express their readiness to become part of the European green landscape and focus on steps in this direction. One of the country’s competitive advantages, high-quality iron ore suitable for DRI production.
At the same time, 93% of Ukrainian exports, which are subject to CBAM, are iron & steel products. The experts and representatives of the industry believe that solution should be in softening the terms and conditions of CBAM application to Ukraine. Otherwise, according to GMK Center estimates, due to CBAM Ukraine may lose $4.6 billion in export revenue in 2026-2030.
?At a time when the EU is supporting the steel industry through protective trade barriers, direct subsidies and decarbonisation grants amounting to more than 10 billion euros in the last 2 years, free carbon allowances in the ETS and compensation for electricity costs, Ukraine does not have any policy to support and preserve the key industry, which provided 15% of exports and almost 6% of GDP last year. Steel is one of the three main materials for recovery. Ukraine, like the EU, faces the challenge of growing cheap imports from third countries. Our industry is already part of the European steel market, so our actions must be harmonized with the actions of the EU,? comments Stanislav Zinchenko, CEO of GMK Center.