European steel exports contracted sharply in the first half of 2026, with shipments to major overseas markets declining despite new trade protection measures. High production costs, US tariffs and subdued international demand continue to weigh on the industry’s position in global steel trade, according to the European Steel Association, EUROFER.
EU steel exports to countries outside the bloc fell 20% year on year in the first half of 2026. Deliveries to the United States dropped 29%, while shipments to India declined 24%, Türkiye 21% and China 18%.
The export downturn coincides with persistently low European steel production and limited growth in domestic consumption, raising questions about the industry’s ability to maintain international market share while financing its transition to lower-emission production.
European steel output and capacity utilisation remain subdued
EU crude steel production decreased 2.9% to 125.8 million tonnes in 2025, followed by a further 1% decline during the first five months of 2026.
Capacity utilisation improved only modestly, reaching approximately 67%. EUROFER forecasts apparent steel consumption growth of just 0.1% in 2026, before a projected recovery of 2.3% in 2027.
The combination of limited domestic demand growth and declining exports leaves European producers operating in a difficult market environment. High production costs and weaker overseas sales continue to constrain the industry’s commercial position.
CBAM does not address carbon costs on overseas sales
The EU’s Carbon Border Adjustment Mechanism is designed to reduce the competitive advantage of imported products that do not face equivalent carbon costs. However, it does not automatically compensate European steelmakers for the additional expenses they incur when exporting into markets without comparable carbon pricing systems.
European producers must continue competing internationally against manufacturers that may benefit from lower energy prices, different environmental obligations or larger production scales.
CBAM can improve competitive conditions for European steelmakers within the EU market, but its protection does not extend automatically to their overseas sales. The decline in exports highlights the distinction between managing carbon-related import competition and addressing the broader cost disadvantages faced by European industry abroad.
Decarbonisation investment faces commercial uncertainty
The competitiveness challenge is particularly relevant to investments in hydrogen-based steelmaking, electric arc furnaces and industrial electrification. These projects require substantial capital expenditure and depend on expectations for future steel prices, electricity costs and demand for lower-emission products.
If European mills lose international market share before decarbonisation investments become commercially competitive, their ability to generate the cash flow needed to finance the transition could weaken.
CBAM-related protection in the domestic market does not, by itself, guarantee sufficient investment returns. Producers must also contend with operating costs and demand conditions affecting their sales in both European and international markets.
EU industrial policy faces pressure over electricity and export competitiveness
The European Commission faces pressure to combine trade measures with access to affordable industrial electricity, financial support for decarbonisation and measures addressing carbon leakage associated with exports.
For investors, the assessment centres on whether future EU steel demand and carbon-price protection can compensate for the industry’s persistent cost disadvantage in international markets.
The latest export figures from EUROFER show the scale of the challenge: European steelmakers are losing ground in overseas markets while domestic production remains subdued and investment requirements for lower-emission steelmaking remain substantial.
