EU Construction Sector Outlook Remains Weak Through 2025

EU 

Housing demand lags despite lower rates

Public infrastructure offers limited support to EU steel scrap consumption

The EU construction sector will remain subdued in 2025, with only marginal growth forecasted. EUROFER’s latest Economic and Steel Market Outlook 2025–2026 projects a modest +1.1% recovery next year after a 2% contraction in 2024. However, the overall outlook remains cautious as the housing segment continues to struggle.

Residential construction is in its ninth consecutive quarter of decline, indicating deep-rooted market challenges. Even with the European Central Bank executing seven policy rate cuts from 2024 to 2025, mortgage lending has not meaningfully recovered. As a result, housing demand remains weak across key EU regions, stifling growth for major scrap-consuming segments like structural steel and rebar.

Public construction provides a partial counterbalance, buoyed by ongoing disbursements from the NextGenerationEU stimulus program. In Q4 2024, civil infrastructure output rose by 1.5%, with roads, bridges, and utilities accounting for most of the gains. These projects rely more heavily on long steel products and recycled steel inputs, offering some support to ferrous scrap flows and electric arc furnace (EAF) activity.

However, broader construction indicators continue to paint a grim picture. The total construction activity index has declined for four consecutive quarters. Confidence in the sector remains negative since March 2022, driven by persistently high material costs and skilled labor shortages in countries like Germany, France, and Poland. These constraints further limit demand for base metals and secondary materials.

EUROFER anticipates that meaningful recovery will not occur until 2026. The forecast assumes that lower interest rates will eventually filter through the lending market and that infrastructure disbursements will accelerate. Until then, scrap recyclers and steelmakers must prepare for low volumes and flat pricing in the construction-linked segment.

ScrapInsight Commentary:

Despite monetary easing and fiscal stimulus, the EU construction market is slow to rebound. This delay poses ongoing challenges for the ferrous scrap trade, particularly for grades linked to long products and rebar. Until housing stabilizes and public infrastructure scales up, scrap flows into EU mills will remain inconsistent. Stakeholders should closely monitor labor markets and material inflation, as these factors will dictate the pace of demand recovery.