INTERVIEW: Italy's Marcegaglia 'fairly positive' on European steel demand for 2026

European steel demand is set to recover slightly in 2026, with prices already showing some signs of a rebound ahead of tighter trade measures and the rollout of the EU's carbon border adjustment mechanism, according to Antonio Marcegaglia, chief executive of Italy-headquartered steelmaker and reroller Marcegaglia Group.

Although demand is "not brilliant", the underlying trend in Europe remains somewhat positive, Marcegaglia said, adding that he expects a further gradual improvement driven by destocking, after what he described as an excessive build-up of inventories across the system.

"Overall, I am fairly positive about an increase in consumption on an annual basis, especially in the second half, because I believe there will be a destocking effect," Marcegaglia said. "I think the system today is overloaded with inventories, so it is likely that the first quarter will see somewhat slower apparent demand. But final demand, I believe, will be overall slightly positive, with a recovery especially in the second part."

Infrastructure spending, particularly in Germany and the mechanical engineering sector, is expected to perform better, while automotive demand is expected to remain broadly stable rather than contract.

The more decisive factor, however, is on the supply side. Marcegaglia expects steel imports into the EU to fall sharply as existing safeguard measures are replaced and CBAM-related uncertainty discourages shipments, the CEO told Platts in an interview this week. Platts is part of S&P Global Energy.

"As is well known, imports will be cut by 50% at least in the second half, but I also believe that the first half of the year will see a reduction due to CBAM uncertainties," Marcegaglia said. "So even if it is not minus 50% over the full year, imports may be down 40% or 35% on an annual basis, as the first part of the year will also see some contraction."

This tightening has already translated into firmer prices, he added. European hot-rolled coil prices, which had fallen to around Eur530-540/mt at their lowest level, have recovered by nearly Eur100, according to Marcegaglia. "We are seeing a significant rebound from the bottom, and there is room for it to continue," he said.

CBAM

CBAM will add further upward pressure, he said.

"Some market participants talk about from Eur40 to Eur60 per metric ton, with some projections as high as Eur80-100...It is truly an unknown today. We are talking about around 8-10% of the product value, so in any case it is an additional important support to the price trend I have described," he said.

Uncertainty persists around the technical details, with default CBAM values expected to be published in mid-December, while actual values -- which are updated according to the new ETS -- will likely be better understood in February.

"I say February for a truly accurate calculation, for a purely bureaucratic issue related to data processing, given the complexity of the rules under which CBAM was designed," he said.

"So today we have an idea of the previous benchmark, but it needs to be updated in February. Therefore, anyone who wants to use the actual values will have to wait until February for an exact calculation and can only make estimates for now. We are in a somewhat unusual situation where this uncertainty does not allow for targeted decisions, and one has to take some risks by making estimates," he added.

The application of CBAM starts in January, with responsibility and costs to be calculated from Jan. 1.

Platts assessed domestic HRC at Eur615/mt ex-works Ruhr Dec. 11, up Eur5 day over day, and at Eur595/mt ex-works Italy, unchanged day over day. Platts assessed imported HRC at Eur500/mt CIF Antwerp and Eur495/mt CIF Southern Europe, both stable day over day.

Fos-sur-Mer project

Meanwhile, Marcegaglia is pressing ahead with its flagship Fos-sur-Mer low-carbon steel project, which the group sees as central to its long-term competitiveness.

The project is currently in the engineering phase, developed in partnership with Danieli, and has already passed a key public permitting milestone, receiving what Marcegaglia described as a "clearly positive" orientation from authorities. Construction is scheduled to begin in the third quarter of next year, with production targeted by the end of 2028.

The facility will rely entirely on scrap and direct reduced iron, powered by nuclear-based electricity, making it fully decarbonized.

"It will be completely green, and also more competitive," Marcegaglia said.

To secure DRI supply, the group is holding structured purchase discussions with projects in the Mediterranean region, including Libya and Oman, as well as Central Africa and Australia. These are supply agreements rather than equity investments.

Closer to home, Marcegaglia has taken a small equity stake in the nearby Gravity project, which aims to produce 1.5 million mt of hydrogen-based green DRI. While Gravity's output is expected to come on stream after Marcegaglia's electric arc furnace, the proximity offers a strategic future option.