While underlying demand remains weak, market participants are increasingly focused on forward-looking expectations, regulation-driven cost risks, and supply-side developments. Although selective upward price tests are being observed across several segments, these movements are largely driven by cost pressures and risk perceptions rather than by a genuine recovery in end-user demand.
Recent production and investment moves indicate that restructuring across the European steel sector is progressing in a strategic rather than uniform manner. ArcelorMittal’s decision to permanently shut down one of its sinter plants in Gijón, Spain, along with its move to divest the Hunedoara plant in Romania to UMB Group, highlights the ongoing exit from high-cost and carbon-intensive assets. By contrast, Liberty Steel has restarted production at its Dalzell plate mill in Scotland under a government-backed contract, enabling a limited recovery in capacity. In Italy, uncertainty continues to surround the future of Acciaierie d’Italia’s assets, which have long been affected by financial and operational challenges.
In early January, flat steel prices across Europe remain broadly stable, while producers are cautiously testing higher price levels. In Germany, hot-rolled coil (HRC) prices are reported at approximately €620–630/t ex-works, cold-rolled coil (CRC) at €720–725/t, and hot-dip galvanized (HDG) at €735–740/t. In Italy, HRC is trading at €615–625/t, CRC at €720–725/t, and HDG at €725–735/t, while in Spain HRC offers are heard at €630–650/t ex-works.
Despite these marginal increases compared with the previous month, price movements continue to be driven primarily by expectations linked to energy costs, carbon-related expenses, and the evolving trade regime rather than by a recovery in physical demand. Buyers view current price increases not as the start of a sustained rebound, but as an early reflection of anticipated cost risks. Trading volumes remain subdued, and the market continues to see upward price testing. Market sources indicate that one of Europe’s leading producers has circulated HRC offers at around €660/t.
A large share of market participants expects inventories to decline during January. While some buyers had partially rebuilt stocks ahead of CBAM implementation, many remain cautious in committing to new purchases due to uncertainty surrounding regulatory implementation. The prevailing strategy is to closely monitor market direction rather than increase short-term inventory exposure. Trading activity remains limited following the year-end holiday period; however, clearer production planning and greater regulatory visibility in January are expected to translate into more pronounced price dynamics in the coming weeks.
As CBAM begins to generate direct financial obligations from 2026 onward, the structure of price competition in steel and metals trade is undergoing a fundamental shift. Competition is increasingly expected to be shaped not only by product specifications and logistics costs, but also by production methods and the availability of verifiable emissions data. Even products with identical technical specifications may generate materially different cost structures depending on the carbon intensity of the supplier. With CBAM certificate prices indexed to the EU carbon market, companies are being forced to reassess their cost bases, while the mechanism is becoming a decisive factor influencing procurement strategies, supplier selection, and long-term contracting structures.
According to EUROFER’s Economic and Steel Market Outlook 2025–2026 (Fourth Quarter) report, demand prospects point to a limited but fragile recovery in 2026. Apparent steel consumption in Europe is projected to increase by approximately 3%, conditional on a recovery in industrial production and an easing of global geopolitical uncertainties. Should these conditions fail to materialize, consumption risks remaining below pre-pandemic levels.
EUROFER also highlights that elevated energy costs and global economic uncertainty continue to exert pressure on the sector. Risks stemming from US trade policies are expected to remain a key factor influencing European demand and trade flows. Against this backdrop, the market is likely to maintain a cautious stance in the first quarter of 2026, with only a gradual and limited recovery expected in the later part of the year. This outlook confirms that, despite modest upward price testing, the market has yet to establish a strong and sustainable demand base.
Looking ahead, the European steel market appears to be entering a period of gradual rebalancing rather than a rapid recovery. As regulatory costs become increasingly visible, producers are adopting more selective approaches to capacity and investment decisions. On the demand side, the pace and scale of any recovery remain uncertain, reinforcing a cautious stance among buyers. Market direction in the coming months will therefore be shaped jointly by trends in energy costs, the practical implementation of carbon obligations, the impact of trade measures, and the trajectory of industrial output.
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