EU steel market begins 2026 with caution

The European steel market is showing a calm and quiet start to 2026, with low trading activity and minimal price movements due to the lingering holiday slowdown affecting market dynamics. Despite weak underlying demand, market participants are keeping a close eye on expectations for the future, risks associated with regulation-driven costs, and developments in the supply side. The slight uptick in prices observed in various segments is largely attributed to cost pressures and perceived risks rather than a genuine surge in end-user demand.

Strategic restructuring within the European steel sector is evident from recent production and investment decisions. ArcelorMittal’s move to permanently close a sinter plant in Gijón, Spain, and divest the Hunedoara plant in Romania to UMB Group demonstrates the shift away from high-cost and carbon-intensive assets. On the contrary, Liberty Steel’s resumption of production at its Dalzell plate mill in Scotland, supported by a government contract, is aiding a modest recovery in capacity. The future of Acciaierie d’Italia’s assets in Italy remains uncertain due to financial and operational challenges.

Flat steel prices across Europe have remained relatively steady in early January, with producers cautiously testing higher price levels. In Germany, prices for hot-rolled coil (HRC) are around €620–630/t ex-works, cold-rolled coil (CRC) at €720–725/t, and hot-dip galvanized (HDG) at €735–740/t. Similarly, in Italy, HRC is trading at €615–625/t, CRC at €720–725/t, and HDG at €725–735/t, while in Spain, HRC offers range from €630–650/t ex-works. Despite marginal increases compared to the previous month, price movements are driven mainly by expectations related to energy costs, carbon expenses, and evolving trade regulations rather than an uptick in physical demand.

As the industry heads towards 2026, the structure of price competition in steel and metals trade will be significantly impacted by the Carbon Border Adjustment Mechanism (CBAM). With increased focus on production methods and carbon emissions data, companies will need to reassess their cost structures and procurement strategies in response to CBAM regulations. EUROFER’s Economic and Steel Market Outlook for 2025–2026 anticipates a limited recovery in 2026 based on industrial production improvements and reduced global uncertainties, with steel consumption in Europe projected to increase by approximately 3%.

Despite the potential for recovery, elevated energy costs, global economic uncertainties, and US trade policies continue to pose challenges for the sector. The European steel market is expected to maintain a cautious stance in the first quarter of 2026, with gradual and limited recovery anticipated later in the year. The coming months will see market direction influenced by energy costs, implementation of carbon obligations, trade measures, and industrial output trends, highlighting the need for careful monitoring of market dynamics for stakeholders in the steel industry.