Posted on 27 Oct 2026
European steelmakers continue to face pressure from carbon costs, high energy prices, weak demand, and global competition despite a provisional EU agreement designed to provide greater flexibility in the carbon market.
Under the agreement, the threshold for cancelling allowances held in the EU Emissions Trading System’s (EU ETS) market stability reserve would increase from 400 million to 700 million allowances, subject to formal approval. However, producers’ costs will continue to depend on carbon prices, energy expenses, production efficiency, and the availability of free allowances.
According to the European Steel Association (EUROFER), EU crude steel production fell to a record low of 125.8 million tons in 2025, while apparent steel consumption is forecast to grow by only 0.1% in 2026. EU steel exports to non-EU markets also dropped by 20% year on year in the first half of 2026.
Meanwhile, negotiations continue over extending the Carbon Border Adjustment Mechanism (CBAM) to selected downstream steel and aluminum products from 2028, creating further uncertainty for mills, processors and manufacturers planning low-carbon investments.
Source:Yieh
