Incoming EU trade defences improve outlook for European steelmakers

Europe’s leading steel producers are reporting a more optimistic market outlook for the second half of 2026 as incoming EU trade protection measures begin to reshape procurement strategies and improve sentiment across the sector.

According to recent quarterly reports from ArcelorMittal, Thyssenkrupp and Salzgitter, lower raw material and energy costs combined with higher steel prices supported improved financial performance in the first quarter. At the same time, producers increasingly expect the EU’s tighter safeguard regime to strengthen domestic demand and capacity utilisation in the coming months.

Trade measures support producer sentiment

The new EU safeguard measures, due to take effect on July 1, 2026, will reduce tariff-rate quotas and introduce 50% duties on above-quota imports. Combined with the Carbon Border Adjustment Mechanism (CBAM), the measures are expected to significantly reduce import pressure.

ArcelorMittal said the incoming framework should support higher capacity utilisation and improved profitability, more than offsetting the expected cost impact of the Middle East conflict.

The company shipped 12.8 million tonnes of steel in the first quarter, down 5.9% year on year. However, higher steel prices lifted sales by more than 4% to USD 15.46 billion, while EBITDA per tonne increased by 14.9% to USD 131.

Salzgitter and Thyssenkrupp report stronger results

Salzgitter reported one of the strongest improvements among European producers. EBITDA in its steel production division more than doubled to EUR 80 million, compared with EUR 39 million in the same period last year. Crude steel production rose slightly to 1.57 million tonnes, while pre-tax profit improved to EUR 24 million after a loss a year earlier.

At Thyssenkrupp Steel Europe, earnings were also supported by the changing market environment. The company said discussions over a potential sale of the steel business to India’s Jindal Group had been paused due to “significantly improved earnings prospects” linked to the EU’s incoming trade measures.

At the same time, Thyssenkrupp continues to push ahead with a major restructuring programme aimed at reducing annual steelmaking capacity from around 11.5 million tonnes to between 8.7 and 9 million tonnes.

Buyers increasingly shift to domestic supply

According to MEPS research, uncertainty surrounding future import quotas and above-quota tariffs has prompted many European steel buyers to reduce reliance on imports and shift procurement toward domestic mills.

Several distributors told MEPS they had dramatically increased purchases from European producers. One buyer reportedly shifted from a sourcing structure that was previously 90% import-based to 90% domestic supply.

Although the six-month rise in European coil prices slowed in May, mills continue to push for higher prices for deliveries scheduled after the new safeguards enter into force in July.

Capacity additions and decarbonisation projects continue

Worldsteel data shows that EU crude steel production fell by 2.6% year on year in the first quarter to 31.7 million tonnes. Germany, however, recorded a 9.3% increase.

Several producers are now preparing to increase production capacity as domestic procurement strengthens. Salzgitter plans to restart blast furnace C in autumn 2026, aligning with the implementation of the new EU trade measures.

ArcelorMittal is also preparing to restart idled blast furnaces at Fos-sur-Mer in France and Dabrowa in Poland. At the same time, the company continues to develop new electric arc furnace capacity in Spain and France, including its Dunkirk EAF project, which is expected to start operations in 2029.

Source and Photo: MEPS