Source: IREPAS / EUROMETAL / NSteel
Soaring European electricity and natural gas prices have pushed direct steelmaking and rolling costs up by more than 110 euros per tonne since August, according to the November short-range outlook released by the International Rebar Producers and Exporters Association (IREPAS), an industry body operating under the EUROMETAL umbrella. Dutch TTF natural gas futures, the benchmark for the continent, have climbed roughly 150 percent over the past three months, rising from below 40 euros per megawatt-hour to above 100 euros. The benchmark briefly touched 100.75 euros per megawatt-hour on October 28, its highest level since December 2022, while European gas storage stood at only about 75 percent of capacity in late October, well below seasonal norms.
IREPAS said the cost squeeze is forcing European mills into a difficult choice between raising selling prices, accepting thinner margins or cutting output. Although the European Union has tightened its steel import safeguard quotas and introduced the carbon border adjustment mechanism, curbing substitute supply from overseas, these measures have not yet translated into significantly better selling prices or profitability, and demand for long steel products across Europe remains persistently weak as domestic producers compete for a limited pool of orders. Recent European price increases have been driven mainly by energy and production costs rather than any recovery in end-user demand, while unusually low river levels have added further transport costs. If energy prices stay elevated, IREPAS expects European steel prices to rise again in the first quarter of 2027, and output cuts at mills whose costs exceed revenues could further reshape regional supply.
Globally, the association judged that the long steel market has deteriorated slightly, with overall demand stable but weak and rebar prices swinging on scrap market movements. Rising scrap costs have encouraged some buyers to turn to Far East billet, and Chinese overcapacity and export volumes remain the main supply pressure on the global market, with no sign of a slowdown in Chinese shipments. US demand has held broadly steady, with growth concentrated in AI data centers, energy projects and select infrastructure while construction stays soft; North American capacity utilization is estimated at around 80 percent, with electricity shortages a growing hurdle for electric arc furnace operators. India and parts of Southeast Asia remain the relatively stronger demand centers, with a moderate Southeast Asian improvement expected in 2027.
The warning underscores how energy costs, rather than trade protection alone, have become the decisive factor for European steel competitiveness. German steel associations and IG Metall are expected to press the issue at the National Steel Summit scheduled for November 16 in Salzgitter, where competitive energy prices and lead markets for low-emission steel top the agenda.
