The European steel industry is fundamental for European economy, providing critical inputs to many sectors, including automotive, construction, and defence. Around five hundred production sites across 22 Member States contribute about EUR 80 billion in GDP and underpin over 2.5 million jobs. Steel plants sustain many regional economies, underlining their socio-economic and political importance.
However, the steel industry currently faces significant challenges. Production costs have increased due to high energy prices, while at the same time prices have dropped due to increasing global non-market overcapacity and decreased demand. Consequently, EU production has shrunk, and current capacity utilisation is below profitable levels. This undermines decarbonisation, as several companies have halted investments in green steel projects.
The recently published EU Competitiveness Compass establishes industrial competitiveness as a core priority and sets outs cross-sectoral actions for the next years. It recognises decarbonisation as a powerful driver of growth when integrated with industrial, competition, economic and trade policies. The EU Clean Industrial Deal (published later this month) will set out further transversal measures to ensure the EU remains an attractive manufacturing location, including for energy-intensive industries. Building on this foundation, additional sector-specific priority actions need to be identified and delivered.
Objective
The objective of the Steel Dialogue is to jointly identify priority measures to deliver a step-change in competitiveness of the European steel sector and to safeguard value-creation and high-quality jobs in the EU.
Building on the Clean Transition Dialogue on steel in March 2024 and follow-up input, which helped form a collective understanding of the challenges, the ambition is now to work together to craft a dedicated Steel and Metals Action Plan, to be launched in spring of this year.
Format and participants
The Steel Dialogue will bring together key representatives of industry, notably steel manufacturers, suppliers of raw materials and off-takers, along with representatives of social partners and civil society. It will be, chaired by President von der Leyen.
Wider consultations with other stakeholders across the industry as well as other parts of the steel value chain will also be conducted and will feed into the Steel and Metals Action Plan, to be presented under the leadership of Executive Vice-President for Prosperity and Industrial Strategy Stéphane Séjourné. The Council and European Parliament will be informed and consulted on the Dialogue.
Proposed elements for discussion
Competitiveness and circularity
Ensuring globally competitive input costs and security of supply is critical for the European steel industry.
- The steel sector, which is – as other sectors – confronted with high energy costs, needs access to low-cost energy. That's why the Affordable Energy Action Plan will include measures such as expanding the use of guarantees and risk reduction instruments to facilitate conclusion of long-term power purchase agreements, incentivising industrial customers to provide demand flexibility services, and encouraging a fair allocation of energy system costs.
- Supply of raw materials must be reliable. The Commission will continue the speedy implementation of the Critical Raw Materials Act, including the first list of Strategic Projects and their support. Furthermore, the joint purchasing of raw materials on behalf of interested companies, could ensure diversification of supplies across the entire value chain and reduce dependencies for key steel inputs, including lithium, nickel, and manganese.
- Achieving a circular steel sector requires improved efficiency and increased recycling. The availability of steel scrap is a limiting factor, as steel products have long lifespans and substantial volumes of scrap are currently exported. We will propose a Circular Economy Act with measures that incentivise the use of secondary materials in manufacturing and help create new lead markets.
- It also essential to ensure the availability of affordable low-carbon hydrogen to enable decarbonised steel production. Possible measures to de-risk and accelerate the uptake of hydrogen include launching a third call under the Hydrogen Bank.
- Simplification is key. The EU will therefore take further measures to ensure that regulatory obligations are as light as possible.
The Dialogue is an opportunity to give feedback on the measures outlined above, in particular as to whether they are considered sufficient to address the challenges of the sector.
Clean transition, decarbonisation and electrification
The transition to clean steel production is an opportunity for Europe to re-gain a competitive edge in the global steel landscape in the years to come. However, many of the necessary investments are currently being put on hold or postponed due to market conditions and policy uncertainty.
- The Clean Industrial Deal intends to create a solid business case for clean steel production. To ensure demand, we need to develop lead markets for low-carbon steel. Options under consideration include the introduction of non-price criteria for public procurement and public support and a voluntary low-carbon label linked to incentives for private procurers.
- To speed up investment, possible short-term measures include the creation of a dedicated financing mechanism for industrial decarbonisation based on the auctions-as-a-service model, to increase leverage of private investments through derisking measures and to facilitate national support through State aid guidelines. We will also propose measures to speed-up administrative procedures for decarbonisation projects and grid access.
We welcome feedback on how to best design effective interventions to make clean steel production commercially viable.
Trade relations and international level playing field
The EU is a firm believer in the need to preserve an open and rules-based trading system that is fair, transparent, and balanced. To this end, the EU is determined to defend the steel sector against unfair trade practices, unjustified tariffs and discriminatory policies that unfairly undermine its competitiveness. Over the past years, we have adopted effective trade defence measures, upgraded the trade defence toolbox, and imposed a safeguard measure on a large scope of steel products. However, in light of increasing levels of overcapacity (expected to reach 630 million tonnes in 2026), it is essential to make more efficient use of anti-dumping or anti-subsidy duties to prevent that our market becomes an export destination for state-induced excess steel production.
The announced 25% duty on all imports of steel into the US will have a major negative effect on the ability of our producers to continue supplying the same levels of steel to the US market and will exacerbate the risk of excess production being redirected to the EU. In addition, the safeguard measures for steel currently in place are set to expire by June 2026. The Commission will define a long-term solution to replace those measures in light of global non-market overcapacity.
To preserve an international level playing field, we will also carefully monitor the effectiveness of CBAM implementation and take action.
We welcome feedback on how best to work together to respond quickly and effectively to unfair and unjustified trading practices, considering the ripple effects of global overcapacities, and on what long-term measures could best replace current safeguard measures.
