The European Commission’s Clean Industrial Deal, on 26 February 2025, correctly identified key challenges facing the European steel industry but lacked concrete policy measures to address them, according to the European Steel Association (Eurofer).

The commission stated that the deal aimed to mobilise over €100bn to support EU-made clean manufacturing and create 500,000 new jobs by 2030. However, Eurofer that critical issues such as global steel overcapacity, carbon border adjustment mechanism (CBAM) loopholes and high energy prices remained unresolved, threatening the competitiveness and survival of the European steel sector.

Axel Eggert, director general of Eurofer, argued in the trade group’s statement that decisive action on trade, CBAM and energy prices was immediately necessary to protect European steelmaking. He stated that while the commission correctly diagnosed the industry’s challenges, it did not provide sufficient policy responses to reverse the sector’s decline. Eggert emphasised that the upcoming strategic dialogue on steel, scheduled for 4 March and convened by commission president Ursula von der Leyen, would be a key opportunity to push for concrete measures under the proposed steel and metals action plan. He urged the rapid deployment of sector-specific initiatives to aid the industry’s recovery.

Overcapacity and trade pressures

Eurofer highlighted that more than 500 steel production sites across 22 EU member states employed over 300,000 highly skilled workers, producing 140m tonnes of steel annually. However, global steel overcapacity had exceeded 550m tonnes, with an additional 150m tonnes of capacity expected by 2026--much higher that EU’s total steel production. Recent imposed by the United States were further distorting trade flows, increasing the risk of market disruptions.

The association warned that without stronger trade defence mechanisms, European steel producers would struggle to compete. It urged the EU to improve safeguard measures under the ongoing review to align them with current market conditions and to establish a comprehensive trade strategy beyond the safeguard period. Eurofer also called for full enforcement of existing trade defence instruments to counteract unfair competition from non-EU producers.

CBAM loopholes

The Clean Industrial Deal included an omnibus package designed to streamline CBAM implementation, introducing a new de minimis threshold to exempt small importers and postponing financial liabilities from 2026 to 2027. However, Eurofer noted that crucial elements affecting CBAM’s effectiveness--such as export provisions, circumvention risks and the impact on downstream sectors--remained unresolved, with no legal certainty on future adjustments.

Eurofer found that the current CBAM framework allowed non-EU steel producers to sell lower-carbon products in Europe at competitive prices while continuing high-carbon production for domestic or non-EU markets. This practice undermined CBAM’s environmental objectives and put European steelmakers at a disadvantage. Additionally, the absence of an export solution meant that European producers would have to bear the carbon cost of their exports, potentially jeopardising 19m tonnes of steel production. The association warned that CBAM’s failure to cover steel-intensive downstream products, such as automotive components and renewable infrastructure materials, could incentivise manufacturers to relocate outside the EU.

Energy costs

Eurofer found that EU wholesale energy prices remained significantly above historical levels, standing at two to four times the rates seen in the US and China. Given that energy constitutes a major share of steel production costs, high electricity prices posed a major threat to both the industry's competitiveness and its ability to decarbonise.

While the Clean Industrial Deal and the Action Plan for Affordable Energy acknowledged the need for lower energy costs, Eurofer concluded that the proposed solutions did not provide immediate relief. The association argued that without a structural reform of the EU electricity market to decouple prices from fossil fuels, existing mechanisms--such as long-term power purchase agreements--would not deliver meaningful cost reductions. Eurofer called on the commission to offer guidance on implementing transitional energy price relief measures at globally competitive levels for energy-intensive industries, alongside regulatory cost reductions on electricity bills. It warned that while planned investments in low-carbon electricity capacity and grids were positive, they would only yield benefits in the medium term.

Raw materials shortage

Eurofer found that ferrous scrap, a critical secondary raw material for the steel sector, was vital for both the industry and the wider EU economy. Recycling ferrous scrap significantly reduced CO2 emissions, lowered energy consumption and decreased reliance on virgin raw materials, making it a key component of the industry’s decarbonisation efforts.

Although the Clean Industrial Deal acknowledged the importance of circular economy initiatives, Eurofer noted that the EU remained the world’s largest exporter of ferrous scrap. Many exports were sent to countries with lower environmental and labour standards, allowing foreign industries to outbid European steelmakers. The association urged policymakers to formally recognise ferrous scrap as a strategic secondary raw material under the Circular Economy Act and to introduce targeted measures to retain scrap supplies within the EU. Such steps, it argued, were necessary to support the steel sector’s transition while safeguarding Europe’s industrial competitiveness and strategic autonomy.

Eurofer concluded that while the Clean Industrial Deal set the right political direction, it failed to provide the radical policy changes needed to secure the future of European steelmaking. The association stressed that measures on trade, CBAM, energy prices and raw material retention must be implemented urgently to prevent further decline in the sector.