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| European Steel Industry |
The future of the European steel industry relies on electric furnaces using scrap metal as traditional blast furnace routes face mounting economic hurdles. Central European steel production will ultimately cease to be economically viable in the long term under current decarbonisation trajectories. PwC Deutschland highlights that conventional smelting processes face severe structural cost disadvantages driven by rising carbon prices and energy disparities.
Rising Carbon Costs and Global Disparities
Conventional blast furnace-basic oxygen furnace methods will become completely uncompetitive after 2040 across all analysed scenarios. EU ETS emission prices will double conventional steel production costs by 2045. Meanwhile, the Carbon Border Adjustment Mechanism will fail to bridge the structural energy cost gap between Europe and international competitors. Gulf states and India will capitalize on cheap energy and raw materials to produce DRI-EAF steel approximately 30 percent cheaper by 2030.
Restructuring the European Value Chain
European producers must relocate energy-intensive primary stages to resource-rich regions while retaining high-tech processing domestically. Germany’s multi-billion-euro subsidies remain insufficient for long-term international competitiveness. Therefore, industry leaders are securing direct-reduced iron supplies from overseas projects, such as agreements signed by Thyssenkrupp Materials Trading in Oman. Electric arc furnace smelting using scrap remains the most sustainable model for the EU, complemented by next-generation furnace technologies from companies like Primetals Technologies.
ScrapInsight Commentary
PwC’s findings signal an irreversible structural shift for European steelmakers, forcing accelerated investments into scrap-based EAF technologies and secure overseas green iron supply chains. As CBAM fails to fully offset energy cost penalties, European mills must pivot toward high-value specialized grades to survive long-term margin compression.
