European steel exports fell by 20% due to expensive energy and competition from China

The European steel industry continues to lose ground in foreign markets: EU steel exports have fallen by about 20%, and production remains near historic lows. The industry is simultaneously suffering from high energy prices, US tariffs, and a surplus of cheaper products from Asia.

According to Eurofer, cited by the Financial Times, in the first half of 2026, shipments of European steel to the US fell by 29% compared to the same period last year. The reason was the 50% US tariffs on steel imports from the EU. Exports to Turkey, India, and China decreased by at least 18%.

Overall, EU steel exports decreased by about a fifth. Meanwhile, crude steel production, after falling 3% in 2025 to about 126 million tonnes, continued to decline at the beginning of this year. Only in May did the industry show a slight recovery.

One of the main problems remains energy costs. European steelmakers were already operating with higher production costs than competitors in many other regions, and the new rise in energy prices has further worsened the situation. Since the beginning of the year, gas prices in the EU have risen by more than 140% amid escalation in the Middle East.

A second serious factor is the global overcapacity of production. According to the European Commission, excess capacity in the global steel industry already exceeds 620 million tonnes and could grow to 721 million tonnes – that is more than five times the EU's annual steel consumption. Much of the pressure is related to Asian production, primarily Chinese.

For European companies, the problem is not only competition in the domestic market. Import restrictions on Chinese steel in certain countries redirect cheaper products to other markets, where EU producers have to compete with them. This complicates European sales of metal abroad, especially for automotive and machinery companies, which also face high costs.

Brussels has already strengthened market protection. From 1 July 2026, a new regime is in force in the EU, which limits duty-free steel imports to a quota of 18.3 million tonnes per year. Shipments above the set quotas are subject to a 50% duty. The European Commission explains this mechanism as necessary to protect European plants from global overproduction and redirection of imports to the European market. 

An additional instrument has been the CBAM mechanism, which applies, among other things, to steel and aims to equalise costs between EU producers, who pay for CO2 emissions, and foreign suppliers.

Eurofer expects that after two years of contraction, steel production in Europe could grow by about 1.5% this year. However, the industry emphasises that the recovery starts from a very low base, while companies simultaneously have to invest significant funds in the transition to low-carbon production.

For the EU, maintaining domestic steel production is of strategic importance: the metal is needed for the automotive industry, construction, energy infrastructure, and the defence sector. Therefore, capacity reduction is increasingly viewed not only as an economic issue but also as an industrial security problem.

Based on materials from: Financial Times, Eurofer, European Commission