Nationalisation Could Prolong Surplus Steel Capacity

Nationalisation and Its Impact on Surplus Steel

Worldsteel warns that nationalisation may keep surplus steel capacity alive despite market inefficiencies and decarbonisation pressures. At the Global Steel Dynamics Forum in New York, director general Edwin Basson said governments have increasingly intervened in struggling steel mills across Europe and the UK. He stressed that nationalisation or quasi-nationalisation often prioritises employment and national interests over economic efficiency, preventing the natural closure of redundant capacity.

Decarbonisation and Regional Challenges

Steel decarbonisation remains critical, but regional energy access will shape strategies. Basson noted that half of global steel will still rely on blast furnaces in the next 20 years because of limited scrap supply and insufficient high-quality direct-reduced iron feedstock. In the EU, decarbonisation is especially pressing as mills face mounting carbon taxes and high energy costs. Scandinavian producers benefit from renewable energy and quality feedstock, while southern and northern Europe face challenges related to energy and raw material access.

The Future of Efficiency and Technology

Worldsteel believes technological innovation could help blast furnaces remain relevant in a low-carbon future. Exponential advancements could reduce emissions from blast furnaces to levels comparable with gas-fed direct-reduced iron and electric arc furnace processes. Basson suggested that Europe may soften its policies to allow current production routes to remain competitive while breakthrough technologies mature.

The Metalnomist Commentary

Nationalisation risks delaying the rationalisation of surplus steel capacity, adding inefficiency to an industry already burdened by decarbonisation costs. However, innovation in blast furnace technology may provide a pragmatic pathway, balancing national interests with climate commitments. The steel sector’s future will depend on aligning environmental priorities with economic realities.