Steel consumption in the Baltics: a change in trend

The Baltic steel market was able to overcome the post-COVID decline faster than Germany, Italy, and other EU countries. Growth in 2025 was achieved thanks to increased production in the machine-building and construction industries, which are the main consumers of flat and long products. The outlook for the current year is also positive, indicating the sustainability of changes not related to a situational rebound from the low comparative base of 2023–2024.

Market profile

The only producer in the region, the Liepājas metalurgs electric steel mill, finally ceased operations in 2016. The demand for finished steel in Estonia, Latvia, and Lithuania is fully covered by imports. The volume of imports can be used to estimate the capacity of the local market.

All three Baltic countries saw a sharp increase in demand for steel in 2021, driven by post-COVID economic stimulus programs. After funding for infrastructure projects was cut, the figures began to decline again. Similar dynamics can be seen in other EU member states.

The growth in steel imports in monetary terms in 2021–2022 was caused not only by physical volumes but also by a price rally in the market. In 2025, European prices for finished rolled products stabilized, so the improvement in indicators reflects real demand from industrial enterprises and construction companies.

Until 2022, a significant share of Baltic imports, especially rebar and flat products, came from Russia and Belarus. Subsequently, there was a reorientation towards new partners, mainly steel producers from Poland and Germany. Ukrainian companies remain important suppliers of pipes and certain types of long products. Some shipments to Riga and Tallinn from South Korea and Vietnam were recorded in 2025, but European steel companies continue to play the main role.

There are certain differences in the structure of steel imports. Latvian consumers mainly purchase rebar, with CMC Poland being the main supplier. In Latvia, demand for steel is generated mainly by the construction industry. According to customs data, in 2025 Latvia imported almost as much rebar as Lithuania – $210 million versus $215 million, although the Latvian economy is significantly smaller than the Lithuanian one.

Lithuania and Estonia mainly import flat rolled products. In Lithuania, the most industrially developed economy in the Baltics, cold-rolled and galvanized sheet for instrument making and the automotive industry are in highest demand.

Estonian imports are distinguished by their focus on premium-segment coated steel, particularly stainless steel. The main suppliers are Sweden’s SSAB and Finland’s Outokumpu. Lithuania leads in terms of import volumes, but it is Estonian companies that buy the most expensive steel.

Demand for flat rolled products: mechanical engineering and wind energy

Mechanical engineering in the Baltic states went through a crisis of deindustrialization linked to the collapse of the USSR and the breakdown of former cooperative ties. Estonia emerged from it with the least losses, with the highest share of this industry in GDP in 2015. Since 2022, regional leadership has passed to Lithuania, where new machine-building plants have appeared in the free economic zones of Klaipėda and Kaunas.

Most new machine-building enterprises in the Baltic countries produce high-tech products with very low steel intensity. This should be taken into account when analyzing the situation in Baltic machine building. An important feature of this industry is its export orientation.

Foreign orders account for 66–85% of the portfolio of local enterprises. They are almost independent of domestic demand. The key advantage is quality, which is on par with German and Swedish counterparts, but costs are 15–20% lower. This allows them to compete successfully in foreign markets.

In 2025, the manufacturing industry in Lithuania, Latvia, and Estonia grew by 5.5%, 3.6%, and 3.1%, respectively, confirming their adaptation to the new conditions. The share of mechanical engineering in the manufacturing industry of these countries is 25–28%.

At the end of 2022, the total capacity of Baltic wind farms was 1.2 GW. The turning point came in 2023, when the Lithuanian government simplified legislation. This allowed 0.513 GW of new capacity to be commissioned in 2024. Lithuania became the regional leader. In 2025, the pace slowed, with an increase of 0.3 GW after the launch of the Kelme I and II wind farms.

In 2025, Estonia began to actively commission new capacity after many years of delays due to height restrictions on wind towers. In Latvia, new wind farms appeared near Talsi and Ventspils. As a result, by the beginning of 2026, the total installed capacity of wind farms in the Baltic States reached 3.337 GW. Of these, 2.5 GW are in Lithuania, 0.7 GW in Estonia, and 0.137 GW in Latvia.

Lithuania managed to maintain its leadership in steel consumption not only thanks to positive dynamics in mechanical engineering, but also thanks to the rapid development of wind energy.

Demand for long steel: construction

The construction industry in the Baltic countries reached its peak in 2019. This period saw the peak commissioning of housing, offices, shopping centers, and new industrial enterprises.

In 2025, only Lithuania was able to return to pre-pandemic construction volumes and, accordingly, demand for long steel . This was made possible by the contribution of the housing sector, which remains weak in Estonia and especially in Latvia.

Here, we could talk about the negative impact of high interest rates on mortgage loans on the industry, but the cost of mortgages is roughly the same in all Baltic countries. Lithuania is the clear leader in terms of new housing construction, as it is the strongest regional economy with the highest purchasing power of households. Thanks to their proximity to Poland, Lithuanian developers were quicker to switch to purchasing building materials that were previously imported from Russia and Belarus.

In 2025, the number of residential transactions in Lithuania exceeded 50,000, including secondary housing. This is the third highest historical figure. Only 2005 and 2021 saw higher figures.

In Estonia, the final statistics for 2025 were somewhat marred by a 12% decline in the volume of foreign construction by local companies. According to Invego CEO Kristian-Thor Vahi, there are still grounds for business optimism in the market.

«Some people like to claim that we have a large stock of unsold apartments and that buyer interest is lower than we would like it to be. In fact, it was a successful year in every sense. Yes, we are still very far from the peak sales levels we once achieved, but we have recovered well after the recent downturn,» Vahi emphasized.

First and foremost, the industry was pulled out by the commercial construction sector. In 2025, a record amount of new office space (almost 100,000 m²) was built in Estonia.

«Estonia has never had such a fruitful year in this sector. The last time Tallinn received such a large amount of modern commercial space at once was perhaps 45 years ago, on the eve of the 1980 Olympic Games,» said the head of one of Estonia’s largest developers.

The main driver of infrastructure construction in all Baltic countries is the joint Rail Baltica project. It involves the creation of a high-speed (up to 249 km/h) railway line «Tallinn-Riga-Kaunas-Polish border» (with a branch to Vilnius) with a length of 870 km. The total cost of the work is estimated at €23.8 billion, 85% of which is being provided by the European Union. This mega-project is boosting the construction industry in the Baltic states and is currently in the active implementation stage.

Outlook for 2026: flat

The continuation of «Industrialization 2.0» in the Baltic states is hampered by demographic problems. In Latvia, according to government data, 20% of registered citizens officially reside outside the republic. The situation is similar in Estonia and Lithuania. When setting up new factories there, investors face a labor shortage.

Industrial production growth in the Baltic states is forecast at only 2-3%. This assumption is based on the expectation of a further reduction in the European Central Bank’s discount rate. This should stimulate demand in EU countries that consume products from machine-building plants in Latvia, Lithuania, and Estonia.

Machine building in these countries may further increase steel consumption thanks to military contracts. In 2025, a number of local agricultural machinery companies mastered the production of dual-use components (e.g., platforms for transporting goods). Orders are financed from the NATO budget and are not included in official statistics.

Wind energy will also contribute to the growth in steel consumption. The driver of its development was the synchronization of the Baltic countries’ power system with the European ENTSO-E, which was completed on February 9, 2025. Now, wind power producers in Lithuania, Latvia, and Estonia can export surpluses to Poland. These will appear after the launch of new projects.

• In 2026, the Lithuanian authorities will determine the winner of the tender for the construction of a 0.7 GW offshore wind farm. It will be located 30–36 km from the coast near Klaipėda.
• In 2026, the Latvian authorities will hold an auction for the right to build the 1 GW ELWIND offshore wind farm.
• In 2025–2026, the Estonian authorities put up for auction the construction of offshore wind farms with a total capacity of up to 1.5 GW.

Construction of these facilities will begin in 2027, and the manufacture of the necessary steel structures is planned for this year. As part of the preparations, in 2026, the ports of Klaipėda and Riga will undergo a large-scale reconstruction of port terminals for the transshipment of steel blades over 100 m long. This work will require additional volumes of rolled steel.

Outlook for 2026: long-length rolled products

Rail Baltica will continue to generate demand for long-length rolled products and railway hardware in the Baltic countries. Railway tracks are currently being laid in Lithuania on the section from the Polish border to Panevėžys, a transport railway hub is being built in Riga, Latvia, and bridge crossings are being erected in Estonia for the future railway line, but there is still uncertainty surrounding this project.

In early February, Marten Kokk, Secretary General of the Estonian Ministry of Climate, said that Latvia is several years behind in implementing its part of the work. According to him, the Estonian government is allocating €500 million to this project for the current year, while Latvia is allocating only €250 million.

The European Union is covering most of the costs. As noted by Edijs Kupčs, chairman of the board of the Latvian Builders Association (LBA), there are unresolved issues regarding the redistribution of EU funds between sectors. This could delay the completion of the work and increase its cost. According to estimates, the current underfunding of the project in its Latvian part amounts to €3-4 billion.

In 2026, LBA expects the growth rate of the Latvian construction industry to slow down to 3–4% compared to 6–8% in 2025.

In Lithuania, the residential sector will continue to support positive dynamics thanks to an increase in household purchasing power. According to government estimates, the average salary in 2026 will grow by 8.5%, while housing prices will grow by 7–7.5%, according to Ober-Haus estimates. The growth in disposable income will outpace the rise in prices offered by developers.

In Estonia, additional demand for long steel may be driven by residential construction in 2026. The main positive signal for the industry was the doubling of the number of permits for new housing construction in January-September 2025 to 2,215 units. This is the highest figure since the end of 2021 and a good springboard for increasing volumes in 2026.

Conclusions

• Machine building in the Baltic states creates steady demand for flat rolled products, but growth potential is limited by the focus on high-tech manufacturing and demographic factors that hinder the creation of new enterprises.
• Growth in demand for long rolled products due to residential construction is possible in Lithuania and Estonia.
• The Rail Baltica project remains a long-term factor supporting demand for long-length rolled products. The completion of the first part, which involves the construction of a single-track railway line (with a second track to be laid later), is planned for 2030.
• Consumers in the Baltic states will face rising prices for rolled steel in 2026 due to the closure of the EU market to steel imports from third countries (CBAM and tighter quotas). They will either have to buy more expensive products from European manufacturers or switch to new suppliers.