Europe’s steel market is beginning to recover from two years of weak demand, but domestic producers are not fully benefiting from the improvement as imports, low capacity utilisation, elevated energy costs and subdued industrial activity continue to pressure the sector.
According to Eurofer’s second-quarter 2026–2027 outlook, EU apparent steel consumption increased in 2025, but the recovery has not translated into stronger domestic production. While demand indicators have improved, European mills remain constrained by weak manufacturing conditions and competitive pressure from foreign supply.
Consumption Improves but Remains Below Previous Levels
EU apparent steel consumption increased by 4.4% in 2025, exceeding earlier expectations following stronger activity in the second half of the year. Consumption remains approximately 10 million tonnes below pre-pandemic levels, while EU crude steel production declined to 125.8 million tonnes, the lowest level recorded.
The gap between recovering demand and falling domestic output highlights the current imbalance in the European steel market, where improving consumption is increasingly being met by imported material rather than increased mill production.
The rise in apparent consumption was particularly strong in the final months of 2025, increasing by 13.5% in the fourth quarter after growth of 4.7% in the third quarter. Eurofer attributed part of this increase to favourable comparison effects after weak prior-year volumes, as well as inventory rebuilding and purchases brought forward ahead of expected stronger demand in 2026. Real steel consumption, which excludes inventory effects and reflects underlying end use, increased by only 0.9% in 2025 following three consecutive years of decline. Eurofer forecasts real steel consumption growth of 1.4% in both 2026 and 2027.
Imports Expand Their Role in EU Steel Supply
The import market has become one of the defining features of the current recovery. EU steel imports reached a record share of apparent consumption during late 2025, accounting for 37% of apparent steel consumption in the fourth quarter, compared with 29% in the third quarter. For the full year 2025, imports represented 30% of EU apparent steel consumption.
Total imports increased by 53% in the fourth quarter of 2025, while finished steel imports rose by 35%. Imports declined in the first quarter of 2026, with total imports falling by 23% and finished steel imports decreasing by 17%, but Eurofer noted that the earlier surge reflected exceptional market conditions rather than a reversal of the broader trend.
The first-quarter 2026 import structure showed continued dependence on international suppliers. The leading sources of finished steel imports were Turkey, South Korea, China, India, Ukraine, Indonesia and Vietnam.
The five largest suppliers accounted for 54% of EU finished steel imports. Turkey held the largest share at 17.2%, followed by South Korea at 11.5%, China at 9.9%, India at 8.9%, Ukraine at 7.3% and Indonesia at 6.4%. Imports from Indonesia increased by 19%, while imports from India rose by 12%. Shipments declined from South Korea, Vietnam, Ukraine, Turkey and China.
Steel Production Faces Low Utilisation and Cost Pressures
While consumption improved, EU crude steel production declined by 2.9% in 2025. Capacity utilisation remained weak, reaching 65.4% in the first quarter of 2026, compared with 65% in 2025. For the capital-intensive steel industry, utilisation at these levels continues to create pressure because producers must manage high fixed costs alongside energy expenses and investment requirements linked to decarbonisation.
Eurofer expects apparent steel consumption growth to remain limited, increasing by only 0.4% in 2026 before strengthening to 2.2% in 2027. Projected apparent consumption volumes are 135 million tonnes in 2026 and 138 million tonnes in 2027, compared with 134 million tonnes in 2025 and 153 million tonnes in 2018.
Exports Provide Limited Support for European Mills
European steel exports have not provided a significant offset to domestic market challenges. In the first two months of 2026, total EU steel exports declined by 33%, while finished steel exports decreased by 30%. Flat product exports fell by 29%, and long product exports declined by 33%.
Export weakness follows a broader decline in 2025, when total exports dropped by 11%.
The main export destinations remained the United Kingdom, Turkey, Switzerland, the United States and India, although shipments to major markets weakened. Exports to the United States fell by 46%, while exports to Turkey declined by 23%. The EU remains a significant net steel importer despite a narrowing trade deficit in early 2026.
Construction Supports Demand While Automotive Remains Weak
The recovery across steel-consuming industries remains uneven. Eurofer’s steel-weighted industrial production index declined by 0.1% in 2025 after falling 4.1% in 2024. The organisation expects industrial production among steel-consuming sectors to increase by 1.3% in 2026 and 2.4% in 2027, indicating gradual stabilisation rather than a broad industrial rebound. Construction remains the strongest source of steel demand resilience. The sector represents approximately 37% of apparent steel consumption and returned to growth of 1.3% in 2025 after contracting by 3.3% in 2024.
Eurofer forecasts construction output growth of 1.5% in 2026 and 2.9% in 2027, supported by infrastructure spending, public investment programmes and delayed effects from earlier monetary easing. Construction recorded growth for three consecutive quarters, including 3.1% growth in the fourth quarter of 2025. Automotive continues to represent the largest weakness among major steel-consuming industries. Vehicle production remained below pre-pandemic levels after declining by 9.6% in 2024 and 4.3% in 2025. Eurofer expects automotive output to fall another 0.2% in 2026 before recovering by 2.9% in 2027. The sector continues to face weak consumer demand, slower electric vehicle adoption, trade uncertainty, manufacturing challenges and high energy costs.
Industrial Sectors Show Mixed Recovery Outlook
Mechanical engineering is expected to improve after recent declines. Output fell by 5.0% in 2024 and 0.7% in 2025, but Eurofer forecasts growth of 1.4% in 2026 and 1.9% in 2027. Metalware production is projected to recover from a 0.3% decline in 2025 to growth of 2.1% in 2026 and 2.3% in 2027.
Other transport equipment remains comparatively stronger, with expected growth of 3.7% in 2026 and 2.4% in 2027. These improvements are not expected to fully compensate for continued weakness in automotive and broader industrial demand.
Energy Costs Continue to Affect Competitiveness
Eurofer forecasts EU economic growth of 1.0% in 2026 and 1.4% in 2027, following 1.3% growth in 2025. Industrial production is expected to increase by 0.8% in 2026 and 2.1% in 2027, although production remains below pre-pandemic levels in several major European economies.
Germany remains a key factor for the European steel market due to its importance in industrial manufacturing, automotive production, machinery and export supply chains. Energy costs remain a significant challenge for producers. Eurofer expects inflation of 2.9% in 2026, easing to 2.4% in 2027.
Energy inflation had returned to positive territory in spring 2026, while Dutch TTF gas prices were approximately €50/MWh after reaching €59/MWh in March. Although energy prices remain below the peaks recorded during the 2022 crisis, they continue to create cost disadvantages for European steel producers compared with competing regions.
Recovery Depends on Domestic Production Growth
The European steel market is showing signs of stabilisation, but the recovery remains incomplete for domestic producers. Demand is gradually improving, but imports are absorbing a growing share of consumption, exports remain weak and capacity utilisation remains near 65%.
The outlook points to a gradual improvement through 2027, but the ability of European mills to convert recovering demand into higher production will depend on competitiveness, energy costs, trade conditions and investment conditions across the sector.
