EUROFER's Response to the Clean Industrial Deal: Call for Decisive Action
The European Steel Association has responded to the European Commission's Clean Industrial Deal, which was announced on February 26, 2025, with a mix of cautious optimism and strong concern. While acknowledging that the Clean Industrial Deal identifies the right challenges facing the European steel industry, EUROFER argues that the solutions proposed by the European Commission are insufficient and fail to address the urgent issues facing the sector.
According to Axel Eggert, Director General of EUROFER, the European Commission has correctly identified the challenges that threaten the long-term survival of the European steel industry, such as global overcapacity, high energy prices, and the loopholes in the Carbon Border Adjustment Mechanism. However, the Clean Industrial Deal does not provide concrete solutions to these pressing issues. Without effective measures, initiatives aimed at creating lead markets, enhancing the circular economy, and increasing local content risk being insufficient to address the deeper structural challenges.
Global Steel Overcapacity: A Growing Threat
One of the most urgent challenges facing the European steel industry is global steel overcapacity. According to EUROFER, global steel excess capacity has already surpassed 550 million metric tons, with an additional 150 million metric tons of capacity forecasted to be added by next year. This excessive capacity, more than four times the total steel production of the EU, creates a distorted market, where countries with excess steel production flood the global market with cheap, subsidized steel, often at unfair prices.
The EU is particularly vulnerable to these distortions, as steel tariffs imposed by the United States have redirected global trade flows, further intensifying competition. EUROFER calls on the European Commission to take decisive action to improve safeguards under existing trade defense mechanisms and create a comprehensive trade regime for the post-safeguard period. This will ensure that European steelmakers are shielded from the unfair competition that arises from global overcapacity.
The Clean Industrial Deal touches on global trade issues but focuses more on broader topics such as raw materials and international partnerships. EUROFER, however, stresses that sector-specific measures on trade defense must be included in the Steel and Metals Action Plan, which the European Commission plans to launch soon. Without such measures, European steelmakers risk being overwhelmed by cheaper steel imports, undermining their competitiveness and market position.
CBAM: Addressing Loopholes to Prevent Carbon Leakage
Another significant issue highlighted by EUROFER is the Carbon Border Adjustment Mechanism (CBAM), which is intended to prevent carbon leakage by imposing carbon costs on imports of steel and other carbon-intensive products. However, the current version of the CBAM contains several loopholes that undermine its effectiveness.
EUROFER notes that steel producers outside the EU can sell less carbon-intensive products to the European market at lower prices, while continuing to produce carbon-intensive steel for domestic or non-EU markets without facing any additional carbon costs. This means that European steelmakers, who are subject to stricter carbon regulations, are at a competitive disadvantage compared to their counterparts in non-EU countries.
Moreover, the CBAM currently does not cover downstream sectors that rely on steel, such as the automotive industry and renewable energy infrastructure. As a result, these industries are incentivized to relocate production to non-EU countries where carbon regulations are less stringent. This undermines the EU’s industrial competitiveness and leads to a relocation of value chains to countries with lower environmental standards.
EUROFER advocates for urgent revisions to the CBAM, particularly to address issues related to exports, circumvention, and resource shuffling. EUROFER also stresses the need for a clear and effective solution before 2026, as the current pace of legislative change leaves European steelmakers in a state of uncertainty.
Energy Prices: A Barrier to Competitiveness and Decarbonization
Energy prices remain one of the biggest challenges for European steel producers. EU wholesale energy prices continue to be significantly higher than those in China, the U.S., and other steel-producing countries. Energy costs account for a large proportion of the steel production expenses, making energy affordability a critical factor in the industry’s competitiveness and ability to decarbonize.
EUROFER notes that while the Clean Industrial Deal acknowledges the importance of reducing energy prices for European industry, the solutions proposed so far do not provide immediate relief. The EU electricity market design still links electricity prices to fossil fuel prices, which means that steelmakers are forced to pay high electricity rates.
EUROFER advocates for a structural redesign of the EU’s energy market to decouple electricity prices from fossil fuel prices and to provide transitional energy price relief to energy-intensive industries. Additionally, EUROFER calls for relief from regulatory costs embedded in electricity bills and the creation of specific instruments to help industries like steel remain internationally competitive.
Strategic Importance of Ferrous Scrap: Strengthening Europe's Circular Economy
Ferrous scrap—recycled steel scrap—is a key raw material for steel production, especially for decarbonizing the European steel industry. Recycling ferrous scrap into new steel significantly reduces CO₂ emissions, lowers energy consumption, and helps reduce dependence on virgin raw materials.
However, EUROFER points out that the EU is the largest exporter of ferrous scrap. Unfortunately, much of this scrap is shipped to countries with lower environmental standards, undermining Europe's green transition and creating a competitive disadvantage for European steelmakers. To address this issue, EUROFER calls for the Circular Economy Act to recognize ferrous scrap as a strategic resource and to develop measures that retain this important material within Europe.
In order to reduce the unsustainable export patterns, EUROFER advocates for targeted measures that ensure more scrap recycling within the EU. These measures would increase the availability of high-quality scrap, which is critical for the decarbonization of steel production while also securing Europe’s industrial competitiveness.
EUROFER’s Call for a Radical Change in Policy
EUROFER emphasizes that the European steel industry stands at a geopolitical and economic crossroads. In light of global security concerns, economic challenges, and the EU’s green transition goals, the steel industry is no longer just a traditional manufacturing sector. It has become a strategic pillar of European sovereignty.
In order to secure Europe’s economic future and ensure competitiveness, EUROFER calls for radical change in the way EU policy addresses the steel sector. The Clean Industrial Deal may have outlined the right challenges, but EUROFER insists that the European Commission must act swiftly to implement decisive actions across trade, energy, decarbonization, and resource management to avoid putting Europe’s industrial base at risk.
Key Takeaways:
• EUROFER welcomes the identification of key challenges in the Clean Industrial Deal but stresses that urgent and decisive action is required to address them effectively.
• Global steel overcapacity of more than 550 million metric tons continues to threaten the competitiveness of European steelmakers.
• The Carbon Border Adjustment Mechanism needs urgent revisions to close loopholes and prevent resource shuffling, ensuring fair competition for European producers.
• Energy prices in the EU remain higher than in global competitors like the U.S. and China, undermining the steel sector’s competitiveness and decarbonization efforts.
• Ferrous scrap, a critical raw material for steel production, should be recognized as a strategic resource within the EU, with measures to retain more of it for recycling.
• EUROFER urges the European Commission to implement radical change to ensure the future of European steel and its strategic importance to the EU’s sovereignty and economic stability.
