European steel producers are operating under subdued industrial demand alongside stronger trade protection, with import restrictions and carbon pricing affecting competition across the market. The extent to which these measures support domestic production depends on whether steel-consuming industries can sustain a recovery in orders.
EU production and import volumes in early 2026
EU crude steel output reached approximately 125.8 million tonnes in 2025, described as a historically low level. Total EU steel imports were around 34 million tonnes in the first half of 2026, down 5% year-on-year.
EUROFER expects a modest improvement in steel-consuming activity during 2026. Construction and mechanical engineering are forecast to offset continued weakness in automotive production, while the overall outlook remains sensitive to economic growth, energy prices and investment conditions.
Diverging import patterns by product category
Import data point to different trends across steel categories. Imports of hot-rolled wide strip increased during the first half of 2026, while several long-product categories saw sharp declines.
The fall in total imports was linked to substantial purchasing ahead of anticipated regulatory changes in late 2025. It also reflected subsequent inventory adjustments and the replacement of previous EU steel safeguards with a stricter trade measure starting July 2026.
These developments complicate assessments of how regulation relates to market performance. Lower aggregate imports do not necessarily signal stronger demand for European steel when purchasing schedules and product mix shift shipment volumes.
Quota limits and traceability under the EU trade measure
The new EU steel trade measure caps tariff-free imports at approximately 18.3 million tonnes annually. It sets a 50% out-of-quota duty and introduces enhanced steel-origin traceability through a melt-and-pour approach.
The measure is designed to address global steel overcapacity and is applied separately from the Carbon Border Adjustment Mechanism (CBAM). While it influences market access and tariff costs, CBAM targets embedded emissions in covered imports.
The two frameworks can affect the same purchasing decisions, but their financial impacts are assessed separately. A single shipment may be constrained by quota availability while also triggering CBAM-related obligations.
CBAM certificate reference prices for covered imports
CBAM entered its financial phase for covered imports entering the regime from January 2026. The first three quarterly certificate reference prices were €75.36, €75.28, and €82.32 per tonne of CO₂ equivalent.
The cost impact on individual imports also depends on an adjustment tied to free allocation under the EU Emissions Trading System. As that adjustment declines over time, some imported products can face higher carbon-cost exposure even if the underlying EU carbon price does not change.
Importers may be better able to manage CBAM-related costs when they can demonstrate verified emissions below applicable default values. Installation-specific emissions data, including its availability and quality, therefore matters alongside the certificate reference price.
Downstream cost pressures and investment signals
Tighter quota access or difficulties substantiating emissions data for CBAM calculations could improve conditions for European steelmakers. At the same time, stricter import conditions can raise costs for machinery manufacturers, metal fabricators and construction contractors relying on specialist grades or limited domestic alternatives.
The overall effect on industry depends on how improved access for European mills aligns with additional input costs faced by downstream users. Trade protection does not automatically translate into higher domestic output if steel-consuming sectors remain constrained by weak orders.
The demand outlook also influences capital expenditure decisions across the European steel sector. Producers considering electric-arc-furnace upgrades, hydrogen-ready processes and low-carbon offtake agreements need confidence that customers will reward lower-emission production and that energy costs will support competitive operation.
Financing decisions depend not only on competitive effects from stronger import protection but also on predictable demand and viable operating economics. Without those conditions, regulatory restrictions alone may not be sufficient to underpin investment in new capacity or lower-carbon technologies.
Performance indicators such as European steel orders and capacity utilisation remain central to assessing whether the market is improving. Changes in import volumes and carbon-related costs can shift competitive conditions, but they cannot independently create demand from Europe’s steel-consuming industries.