Steel consumption in the Western Balkans: threat of a decline

Overall, steel demand in Slovenia is projected to grow by 2.6% in 2026, reaching 1.15* million tons; in Croatia, by 3.4%, reaching 1.065* million tons; and in Bosnia and Herzegovina (BiH) by 3.8%, to 685* thousand tons (*CSE). If the risks mentioned above materialize, steel consumption will decline.

Market profile

The steel sector in Slovenia is represented by the companies of the SIJ Group. Steelmaking with a capacity of 726,000 tons per year is carried out at SIJ Acroni and SIJ Metal Ravne (90,000 tons). These facilities produce high-margin steel grades — such as tool steel and electrical steel. SIJ Acroni specializes in coil and heavy plate products, while SIJ Metal Ravne focuses on long products.

There is also the SIJ Ravne Systems rolling mill, which produces industrial knives and rolls for rolling mills, as well as SIJ SUZ. Its specialization is wire and shaped rolled products with high dimensional accuracy for the machine-building industry.

In total, the SIJ Group’s rolling capacity allows for the production of 370–400 thousand tons per year. Surplus volumes of steel billets are exported.

In Croatia, the only local player is the ABS Sisak EAF plant with a capacity of 350 thousand tons per year, which is part of the Italian Danieli Group. Currently, ABS Sisak smelts steel and sends billets for rolling to Italy, to the ABS Udine plant. Danieli is modernizing the Croatian asset, and construction of a rolling mill is underway. In the future, the facility is expected to produce high-quality long products for the machine-building and energy sectors.

In Bosnia and Herzegovina, the main producer is the integrated steelworks Nova Zeljezara Zenica, with an annual capacity of 1 million tons, which specializes in long products for the construction sector. Part of the billets produced here is used by the local rolling mill Ze-Steel (20,000 tons per year), also located in Zenica.

Another rolling mill is Metal Tehnologija in Derventa, the largest producer of expanded steel in the Balkans with a capacity of 1.7 million m² per year. This company purchases coiled steel primarily from the Serbian steel mill Zelezara Smederevo.

Despite significant volumes of rolled steel production in Slovenia and Bosnia and Herzegovina, imports account for a fairly high share of steel consumption there—70% and 75% (projected for 2025).

In Slovenia, this situation is due to the narrow specialization of SIJ Group’s plants. Standard cold-rolled coils and galvanized steel for the automotive industry and home appliance manufacturing, as well as heavy plate for shipbuilding, are sourced from Italy (Arvedi and Marcegaglia), Austria (Voestalpine), and Serbia (Zelezara Smederevo).

The activities of steel service centers in Ljubljana and Celje must also be taken into account. They purchase sheet steel from Turkey and Southeast Asia, then ship finished structures and profiled sheet to Croatia. This is transit steel when considering final consumption in Slovenia.

In Bosnia and Herzegovina, the dominance of imports is caused by problems at Nova Zeljezara Zenica, which previously belonged to the ArcelorMittal group. As with other steel enterprises in Eastern Europe acquired by Lakshmi Mittal’s company, there were no significant investments in production modernization here. As a result, the company’s own coke plant had to be shut down in 2024 for environmental reasons.

The switch to 100% imported coke negatively impacted production costs, as did the underloading of the blast furnace. Reinforcing bars manufactured in Zenica turned out to be $20–30/t more expensive than those imported into Bosnia and Herzegovina from Turkey. Although, by definition, converter steel should be cheaper than electric arc furnace steel. Moreover, Turkish EAF plants operate on imported scrap steel, while the Bosnian steel mill uses iron ore mined in-house from the mining and processing plant in Prijedor.

Nevertheless, imports of rebar from Turkey in 2025 rose by 885% compared to the average for the previous four years. Shipments of rebar mesh from Serbia increased by 192%. Imported products accounted for over 50% of domestic steel consumption.

In Croatia, the share of imports reaches 97% due to the lack of domestic steel production.

The steel market in the Western Balkans is characterized by heterogeneity. In industrially developed Slovenia, demand for flat products predominates, while in Bosnia and Herzegovina and Croatia, demand for long products is higher. These structural differences stem from varying degrees of integration into the EU economic area. Slovenia joined the European Union in 2004, and Croatia in 2013. Bosnia and Herzegovina remains a candidate country.

In Slovenia, the share of the machinery sector in the economy — and consequently, the consumption of flat steel — is on par with that of developed EU countries. In Bosnia and Herzegovina, the main demand comes from the construction sector, which uses long steel. Croatia occupies an intermediate position.

Demand for flat steel

Slovenia’s machine-building industry is deeply integrated into the German and Italian automotive sectors, as well as into the global energy sector. Unlike its neighbors, Slovenia consumes not just steel, but complex alloys and flat steel products with high added value.

The main consumers of flat steel products:

• The Ledinek Engineering plant in Hoče, a global leader in the production of woodworking equipment and cross-laminated timber production lines.A major consumer of tool steel.
• The Litostroj Power plant in Ljubljana, a major manufacturer of hydro turbines and pumping equipment.
• The Palfinger plant in Maribor, owned by the Austrian group of the same name. It carries out large-scale production of hydraulic cranes and lifting systems.
• The Revoz plant in Novo Mesto, part of the Renault Group. It is the main consumer of galvanized flat steel for automotive body parts.
• The Gorenje plant in Velenje, part of the Chinese Hisense Group. A major consumer of cold-rolled and painted steel sheets for the bodies of refrigerators, stoves, and washing machines.

In 2024, Slovenia’s machinery manufacturing sector returned to production levels seen a decade earlier due to stagnation in industrial production in Germany, its primary export market. A recovery was observed in 2025, driven primarily by a low base effect.

In 2025, Hisense increased its market share in Europe to 9–10% by investing €65 million in the development of its plant in Velenje. This also improved industry performance and stimulated growth in steel consumption.

Shipbuilding in the Western Balkans is concentrated in Croatia and is currently facing difficult times. Local shipyards primarily manufacture yachts and small coastal vessels. They also perform maintenance and repairs on pleasure and fishing boats. However, positive trends emerged in 2025.

The Croatian shipyard Maj in Rijeka received a large order from the Scenic Group to build polar cruise liners. Croatia’s largest shipyard, Brodosplit in Split, signed a contract with the Italian shipbuilding group Fincantieri to supply hull sections for mega-liners.

The situation is currently best at the Viktor Lenac shipyard in Rijeka. There is a steady flow of orders here from major ferry operators and the U.S. Navy. Croatian shipbuilders’ demand for heavy plate for the current year stands at 17–18 thousand tons, taking into account projects already underway.

Croatia is the leader in wind energy development in the Western Balkans. By the end of 2025, the installed capacity of local wind farms had reached 1.26 GW. In 2025, construction began on the 120 MW Ljubovo wind farm. The Ukrainian group DTEK is building the 127 MW Brda Umovi wind farm.

In Bosnia and Herzegovina, the total capacity of wind farms stood at 310 MW as of early 2026. Work has been completed on the Ivan Sedlo (25 MW) and Ivovik (84 MW) wind farms. Construction has begun on a 125 MW wind farm near Livno.

Slovenia is one of the few EU countries with virtually no wind energy. Projects have been blocked for years due to protests by local communities over environmental concerns.

Demand for long products

The construction sector varies in structure across the countries of the region. In Slovenia and Bosnia and Herzegovina, infrastructure construction dominates, while in Croatia, the residential sector is the main driver.

In Bosnia and Herzegovina, the bulk of construction work and demand for long-length steel is generated by the construction of the Pan-European Transport Corridor Vc. It will connect Budapest with the Croatian port of Ploče.

In Slovenia, the largest infrastructure projects in 2025 are the Karawanke road tunnel on the border with Austria and the construction of the Divaca–Koper railway. The latter project, despite its short length (27 km), is extremely steel-intensive. It involves the construction of seven tunnels and three viaducts with a total length of 20 km.

In addition to infrastructure projects, the country is seeing the construction of many logistics centers and industrial buildings. Slovenian companies are constantly expanding their production. For example, in 2025, the local pharmaceutical giant Lek began construction on two new plants in Lendava and Brnik, costing $400 million and $440 million, respectively.

The dominance of the residential sector in Croatia is linked to the reconstruction of housing stock destroyed after the powerful earthquake in 2020, as well as the rapid development of the tourism industry. As in many Balkan countries, small hotels and guest villas are often registered here as ordinary residential properties.

The number of building permits in Croatia is twice as high as in neighboring countries. While Slovenia and Bosnia and Herzegovina primarily see the construction of multi-story residential complexes, 90% of permits in Croatia are issued for single-story buildings — specifically, villas and small hotels.

Despite the comparable share of construction in GDP, the steel intensity of the industry in Croatia is significantly higher than in Slovenia. In Slovenia, expensive projects with complex engineering solutions predominate, utilizing steel structures made from premium steel grades with special requirements. In Croatia, construction relies on concrete and rebar. Hence, higher steel consumption per €1 million of GDP contribution.

Outlook for flat steel consumption

Theoretically, demand for steel sheet in Slovenia from the machinery manufacturing sector is expected to grow by 2.4% by the end of 2026. Key drivers:

• Hisense Europe plans to increase its revenue to €5.5 billion, up from €4.8 billion in 2025. This means expanding production, which will require more coiled steel.
• Renault has chosen Revoz as the base site for full-scale production of the budget-friendly Twingo electric vehicles. Mass production began in the first quarter, with an expected capacity of up to 150,000 units per year.

These factors may be offset by a decline in demand from power machinery manufacturers and other sectors of the Slovenian heavy machinery industry focused on exports to Germany. If the macroeconomic situation there does not improve, machinery plants in Slovenia will have to cut production.

It is unlikely that wind energy will help boost demand for flat-rolled steel. According to local experts, the construction of wind farms in Slovenia will not begin before 2028 (if it begins at all).

In Croatia and Bosnia and Herzegovina, wind energy is a real driver of steel sales.

• The Croatian government has set a target of 1.64 GW of total wind power capacity by 2030. To achieve this, an additional 3–4 wind farms with a combined capacity of 400 MW need to be built.
• The government of Bosnia and Herzegovina has included 3.8 GW of wind power projects in its national program. Their implementation is planned by 2035. Taking into account existing capacity, an additional 3.5 GW is needed. This is the most promising market in the region.

Outlook for long products

In Slovenia, construction remains not a driver but a stabilizer of steel demand. The main infrastructure projects are the continuation of work on the Karawanke road tunnel and the construction of the Divaca–Koper railway line.

The first phase of these projects has already been completed. At the end of March, traffic was opened in the second tunnel tube for cars and trains to the Port of Koper, and the second phase began immediately. It involves a major overhaul of the first Karavanke tunnel tube (opened in 1991) and the construction of the second Divaca–Koper railway line (currently open to one-way traffic). The projects are scheduled for completion by 2029 and 2030.

In Bosnia and Herzegovina, demand for steel is driven by ongoing work on the Vc motorway corridor. In its southern section, in the mountains of Herzegovina, the most complex and steel-intensive projects are currently being implemented. These include the 11-km-long Prenj Tunnel, one of the longest in Europe, and the 14-km-long Mostar North–Mostar South section. This section consists entirely of bridges and tunnels in rocky terrain. Under such conditions, 35–40 thousand tons of steel are used for every 10 km of the route. Work on Section Vc is scheduled to be completed by 2030.

A risk factor for the local steel market is the BiH government’s plans to impose a 30% tariff on steel imports in response to an abnormal increase in supplies from Turkey and Serbia in 2025. The relevant document was drafted by the Ministry of Foreign Trade and Economic Relations, but has not yet been approved by the Cabinet of Ministers.

If this decision is adopted, despite the objections of local business associations, construction companies will face a $20–30/ton increase in the cost of rebar and steel sections. As a rule, companies carrying out government contracts operate on a fixed-price basis. If contractors in Bosnia and Herzegovina did not account for the risk of steel tariffs in their tender documentation, they will not be able to pass these additional costs on to the government retroactively, which will result in direct losses for construction companies and the risk of work stoppages.

Tariff protectionism will also hit the housing sector. The purchasing power of domestic buyers in Sarajevo or Banja Luka (the main centers of urban development) is significantly lower than in Croatia. A sharp 10% increase in the price per square meter due to the introduction of a 30% steel tariff could simply cut off half of potential customers.

To avoid passing on the additional costs, many Bosnian builders stockpiled massive quantities of Turkish rebar at the end of last year in anticipation of the tariffs. This allows them to maintain current prices through the first half of 2026. Once those stocks run out, they will have to either raise prices sharply or halt construction.

In Croatia, the driving force remained the same—residential construction—but the situation is mixed. In Zagreb and the Adriatic resort areas, the momentum of the frenzied investment demand that emerged after 2017 persisted through 2023–2025. Against the backdrop of Croatia’s upcoming accession to the eurozone (effective January 1, 2023), foreigners were snapping up residential and tourist real estate in new developments en masse.

This allowed developers to adjust prices in response to every increase in construction material costs in 2023–2024. Construction margins were so high that even 20–30% spikes in rebar prices in 2025 were not critical for developers—they had built up a reserve of financial stability.

Prices for new housing rose by 12–15% in 2025. Zagreb and Split proved to be particularly overheated. Average prices reached €3,600/m² and €4,000/m². This made housing in Zagreb one of the least affordable in the EU (alongside Prague and Amsterdam) relative to local residents’ incomes.

In 2026, prices hit a “ceiling,” and the number of transactions began to decline. This means that buyers are no longer willing to pay any price. There is nowhere left to pass on the costs—the market will grind to a halt. Rising steel prices (due to CBAM or local tariffs) will no longer hit buyers’ wallets but will instead threaten the very survival of the construction industry in Croatia and reduce steel consumption.

In response to the situation, the Croatian government passed the Affordable Housing Act (Zakon o priuštivom stanovanju) in February 2026. The law provides for €2 billion in government investment by 2030 to build 20,000 housing units. This suggests that steel consumption will increase. However, if developers raise prices by another 5% to offset the cost of steel, they risk failing to find buyers.