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US tariffs hit recovery hopes, European steel market continues to falter

European Steel Association (EUROFER), in its Economic and Steel Market Outlook for the second quarter of 2025, reported that hopes for a recovery in the steel market have been severely shaken by the new 50% steel tariffs imposed by the US.

US tariffs hit recovery hopes, European steel market continues to falter

Uncertainty and disruptions caused by the new US trade policies continue to negatively affect steel demand and consumption, despite the overall economic resilience driven by the service sector. The report stated that the sector is not expected to recover until 2026.

According to EUROFER, apparent steel consumption will lag behind the previous year in 2025. While 2.2% growth was previously expected, this forecast has been reversed and a contraction of 0.9% is predicted. Thus, steel consumption will shrink for the fourth consecutive year. Prospects for industries that use steel are similarly pessimistic, with a recovery of 1.6% previously expected, but instead a contraction of 0.5%. This trend follows a 3.7% decrease in 2024.

“The new 50% US tariffs on steel have dealt a heavy blow to the already fragile European steel market,” noted Axel Eggert, Director General of EUROFER, following the release of the report. Global overcapacity, high energy costs and geopolitical risks are putting severe pressure on European Union producers. Many producers are now forced to resort to measures such as capacity reductions, staff reductions and the suspension of decarbonization projects. If EU-US negotiations fail, it may become inevitable for the European Commission to take urgent trade measures to stabilize the EU steel market.”

According to 2024 data, apparent steel consumption in Europe increased only slightly in the last quarter of the year, growing by 0.5% to reach a total of 30.1 million tons. However, demand for the full year remained well below pre-pandemic levels. This situation is expected to remain unchanged until the first quarter of 2026.

Domestic deliveries followed a similar pattern, decreasing by 2% in the last quarter of 2024 and falling by 2.8% for the year as a whole. In contrast, steel imports increased by 6.3% and the import share in the EU steel market remained at a historically high level of 27% throughout 2024.

The performance of industries that use steel in the EU also remained weak throughout the year. The fourth quarter of 2024 saw a sector-wide decrease of 4.9%. The automotive sector in particular contracted by 2.6%, while the construction sector remained stable at a low level. The US tariffs and the uncertainty created by them are expected to have a negative impact on the Steel-Weighted Industrial Production Index for 2025. Previously expected to increase by 0.9%, this index is now projected to decrease by 0.5%. In 2026, only a limited recovery of 1.3% is expected.

EUROFER calls for a review of trade policies and swift action to prevent further damage to the European steel industry.

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