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| ArceloMittal EAF/DRI Project |
ArcelorMittal Suspends EAF/DRI Project Amid Market and Subsidy Withdrawal
ArcelorMittal officially halted its electric-arc furnace (EAF) and direct reduced iron (DRI) project, cancelling €1.3 billion in German government subsidies. The project required construction start by June 2025 but the company cited poor market conditions and the lack of economic viability for CO2-reduced steel production. CEO Geert Van Poelvoorde emphasized the severe challenge, despite government financial support, in maintaining competitive green steel production. This suspension signals a significant setback in Europe’s steel industry decarbonization efforts.
Market Pressures and Hydrogen Costs Threaten Europe’s Steel Decarbonization Goals
The European steel sector faces unprecedented pressure from high imports and cost challenges, especially for decarbonization investments. ArcelorMittal calls for a 15% cap on flat product imports to safeguard competitiveness. Meanwhile, green hydrogen remains prohibitively expensive for steelmaking, with current prices between €5–8 per kg far exceeding the €2.50–3.00 per kg breakeven needed. Natural gas-based DRI also remains costly, making Europe’s transition to low-carbon steel slower and more difficult than expected.
Declining Demand and Rising Imports Impact Steel Prices and Outlook
European steel demand slows amid high imports and weak consumption forecasts. Eurofer projects a 0.9% drop in EU steel consumption to 128 million tonnes in 2025, with imports comprising about 30% of domestic use. Hot rolled coil (HRC) prices peaked early 2025 but then fell sharply to €590/tonne in June, the lowest since January. These trends undermine short-term optimism for green steel demand and highlight the challenges of balancing sustainability with market realities.
ScrapInsight Commentary
ArcelorMittal’s project halt underscores the steel sector’s precarious position amid soaring import competition and costly decarbonization technologies. Unless policy measures curb imports and green hydrogen prices fall, Europe risks lagging in clean steel production. The market must prepare for continued price volatility and slower progress toward 2030 CO2 targets.
