Steel market participants warn of risks in the new EU state aid program

Steel market participants and industry observers warn that the new EU state aid framework program designed to support the Clean Industry Agreement (CISAF) could be undermined by uneven implementation at the national level, Fastmarkets reports.

Eurometal President Alexandre Julius noted that the association welcomes the new system as a step in the right direction, especially in the context of protecting Europe’s green industrial base.

“The new flexibility is helpful, but its effect will be uneven unless member states actively mobilize support plans – and this remains uncertain in many cases, especially for mid-sized market participants in the steel value chain,” he said.

Eurometal, which represents European distributors of steel, pipes, and metal products, has repeatedly highlighted the critical issue of high energy costs for the European metallurgical industry for all parties in the supply chain and the creation of value for metal products.

Access to affordable renewable energy is a challenge for European steelmakers’ decarbonization efforts. According to estimates by the Fastmarkets research group, between 40 and 50 million tons of new green steel production capacity using only electric arc furnaces or DRI/EAF will be commissioned in the region between 2025 and 2030. Currently, about 45% of European steel is produced using the electric arc melting method.

The transition to the DRI/EAF production route raises concerns, particularly regarding energy efficiency. Representatives of steel mills note that a sufficient amount of renewable energy at affordable prices is needed. At the same time, the cost of electricity in Europe remains much higher than in many other countries around the world. Industrial tariffs often exceed €100/MWh (for comparison, costs in the US and China are often closer to €30-50/MWh).

Sources among manufacturers warn that under such conditions, even taking into account CBAM costs, imports may still be more competitive than European steel.

At the same time, as Alexander Julius announced at the conference marking the 75th anniversary of Eurometal, the latter has begun collecting information from EU associations, national federations, and steel users on imports of cheap steel derivatives into the bloc. The association is analyzing the growth in supplies from abroad compared to the steady decline in steel consumption in Europe and domestic production, Kallanish writes.

According to Julius, Brussels and national governments are “listening,” so this political momentum must be seized. The Eurometal president also remains optimistic about the potential for creating a level playing field for steel processing companies in Europe.

The European Commission launched CISAF on June 25. The program, which will run until 2030, allows member states to provide aid for clean energy, industrial decarbonization, and the development of clean technologies.

Earlier, Eurometal emphasized the need to harmonize European regulations and support the industry on the path to decarbonization.