Germany’s steel output falls again in 2025, industry calls for decisive action

Germany’s steel industry has recorded its fourth consecutive crisis year, with crude steel production dropping sharply again in 2025. Output fell to 34.1 million tonnes, around 9% below the already weak level of the previous year, according to figures released in Berlin on January 21. Comparable volumes were last seen only during the global financial crisis of 2009.

Capacity utilization declined to below 70% – a critical threshold for the energy-intensive steel sector. For the fourth year in a row, production remained well below 40 million tonnes, a level widely regarded as necessary for sustainable plant utilization. Since 2018, that mark has been missed six times, underscoring what the industry describes as a prolonged recessionary phase.

Domestic demand remained equally weak. Based on preliminary data through October, steel consumption in Germany is estimated at around 30 million tonnes for the full year, again below the already depressed average of the past four years.

Kerstin Maria Rippel, chief executive of the German Steel Federation, attributes the downturn to a combination of structural pressures. “For the industry, a lot is coming together at the moment: historically weak demand, continuously rising import pressure and energy prices that are not internationally competitive,” she said. While she acknowledged that the German government and the European Commission have begun to respond, she warned that implementation is lagging. “Here, pressure and speed must be maintained,” Rippel said, adding: “2026 must be the year of safeguarding industrial locations.”

Rising imports add pressure

The situation is being aggravated by developments in foreign trade. Around one in three tonnes of steel used in the EU now comes from outside the bloc. Global overcapacity – particularly in Asia – combined with what the industry describes as an increasingly aggressive and unpredictable US tariff policy, is intensifying competitive pressure.

“Under these conditions, the steel cycle will hardly recover in 2026,” Rippel warned. She urged rapid implementation of the European Commission’s proposal for a stronger trade defense instrument, stressing that “the industry cannot afford further delays.”

Energy costs remain the key location issue

Energy prices continue to dominate the debate over Germany’s industrial competitiveness. Rippel said recent meetings such as the Chancellor’s steel summit and the SME summit showed that policymakers are aware of the challenges, but concrete regulatory steps are still needed.

“The current, non-competitive electricity prices are a heavy burden and at the same time a central obstacle to transforming the steel industry toward climate neutrality,” she said. While welcoming ongoing government efforts, Rippel called for a medium-term target of an internationally competitive industrial electricity price of 3 to 6 euro cents per kilowatt-hour, “all in, including grid fees, levies and surcharges.”

Key measures, she argued, include a permanent reduction in grid charges, the continued application of electricity price compensation, and the ability to combine compensation schemes with an industrial power price.

Demand for low-emission steel seen as opportunity

Despite the bleak short-term outlook, the association sees potential for new momentum in the targeted development of lead markets for increasingly low-emission steel produced in the EU.

At national level, Rippel pointed to the ongoing reform of public procurement law as a decisive lever. “In public investment, the use of increasingly low-emission basic materials must be made binding,” she said. To generate effective demand and economic stimulus, she added, EU-content rules defined in Brussels would also be required.

Source: WV Stahl, Photo: Fotolia