EU Steel Demand 2026 Shows Only Modest Recovery as Excess Capacity Grows

EU steelmaking

EU steel demand 2026 is expected to recover only modestly, with the OECD forecasting a 1.4% increase across the EU and UK to 153.65mn t. The improvement follows a 1.2% decline in 2025 and falls well short of a meaningful rebound.

EU steel demand 2026 will remain constrained by high energy costs, weak downstream manufacturing and persistent import pressure. Steel production across the EU and UK is forecast at 132.4mn t after falling by 2.4% last year.

EU steel demand 2026 also faces a wider structural problem. Global steel demand remains weak while excess production capacity continues to grow, increasing pressure on prices and trade flows.

New European import measures may provide some support to regional mills, but trade protection alone is unlikely to restore demand without stronger industrial activity.

Europe Remains Trapped Between Weak Demand and Import Pressure

Germany illustrates the depth of the challenge. Steel demand is expected to rise by only 1.1% in 2026 after falling by 6.1% last year.

Weak domestic consumption and high import volumes continue to affect German competitiveness. High electricity and energy costs add further pressure to steelmakers already facing weak utilisation.

France shows an even weaker recovery profile. Demand is expected to increase by just 0.3% after dropping by 12.6% in 2025.

This means European mills may receive some pricing support from tighter import controls without seeing equivalent growth in physical consumption.

That distinction matters. Trade measures can improve domestic market protection, but they cannot replace demand from automotive, construction, machinery and other major steel-consuming sectors.

The risk is that mills face a market where imports are restricted but end-user consumption remains weak. In that environment, production discipline and cost competitiveness become increasingly important.

Global Overcapacity Shifts Growth Toward India and Emerging Markets

Global steel demand is forecast to increase by only 0.4% to 1.812bn t in 2026 after declining by 2.6% last year.

China remains the main drag, with demand expected to fall by 0.6%. In contrast, India is forecast to grow by 6.7%, while Asean steel demand is expected to rise by 3.5%.

Africa is projected to deliver the strongest regional growth at 4.4%. Middle East demand growth is expected to slow sharply to 1.6% from 6.4% because of regional conflict.

Trade flows are also becoming more complex. The OECD warned that some Chinese steel affected by trade restrictions is increasingly moving through third countries before reaching OECD markets.

Chinese semi-finished steel exports to southeast Asia increased by 300% in 2025. Some of that material can be converted into rolled products and subsequently exported into other markets.

Hot-rolled plate and wide coil have shown some of the largest shifts. This makes origin tracking and anti-circumvention measures increasingly important for steel policy.

The longer-term problem is capacity. Global excess steel capacity is projected to increase from 640mn t in 2025 to 745mn t by 2028.

Traditional blast furnace production also remains dominant. Global blast furnace pig iron output stood near 1.3bn t in 2024, roughly ten times direct reduced iron production, with China accounting for around 70% of global blast furnace output.

The Metalnomist Commentary

Europe’s steel problem is increasingly structural rather than cyclical. Import controls may protect prices, but without lower energy costs and stronger downstream manufacturing, excess global capacity will continue to pressure European mills.