The move includes cancelling associated subsidies from German government totaling €1.3 billion that were tied to a June 2025 construction commence timeline.
“Since the contract with the German government for €1.3 billion in funding stipulated that construction work on the project would begin by June 2025, ArcelorMittal was required to officially notify the government that it could not continue with the investments due to the market situation and the lack of economic viability of CO2-reduced steel production,” the company said.
“We appreciate the funding from the German government and the state of Bremen, as well as the support from the state of Brandenburg, for this project. But even with the financial support, the economic viability of this transition is not sufficiently ensured, which highlights the scale of the challenge,” ArcelorMittal Europe’s chief executive Geert Van Poelvoorde said.
High import competition and costs hinder European steel industry investments
“The European steel industry is currently under unprecedented pressure to maintain its competitiveness and, even without the additional costs required for decarbonization, imports are a major problem,” Van Poelvoorde said. “We need a 15% cap on flat product imports, which represents a reduction of about 50% compared with current levels.
“Once this is achieved, the industry will also be in a much better position to drive investments in decarbonization,” he added.
Instead of building DRI modules and by focusing on the EAFs in Bremen and Eisenhüttenstadt, ArcelorMittal hopes to be “prepared when production with electric-arc furnaces becomes economically viable.”
Green hydrogen remains too expensive for steelmaking applications
The company also said that green hydrogen is not yet a viable energy source and natural gas-based DRI production is not competitive as a transitional solution.
It said that using hydrogen with existing DRI modules in Europe would currently be too expensive to be competitive, with hydrogen prices currently around €5-8 ($5-8) per kg. And a trade source in Northern Europe said the price of hydrogen should be “around €2.50-3.00 per kg to make it commercially viable for steelmaking.”
Another source said €3.00 per kg was just a breakeven price for hydrogen and “to make any profit, it would need to be below that level.”
Around 140,000-150,000 tonnes per year of hydrogen would be required to fuel a single 2 million tpy DRI module, a mill source told Fastmarkets.
“Before you even get to hydrogen you can’t make DRI in Europe with natural gas [because] even with natural gas the costs are prohibitive,” a source said.
Decarbonization goals under threat amid slow progress and rising costs
In November 2024, ArcelorMittal put several green project investments in Europe on hold due to unfavorable market circumstances.
The company warned in November 2024 that it “could not make final investment decisions on the construction of new DRI-EAF plants in Europe because the political, energy, and market conditions had not developed in the hoped-for direction,” ArcelorMittal said.
At the time, the company said it would explore a phased approach to decarbonization in Europe, starting with the construction of EAFs and in May 2025 ArcelorMittal confirmed plans to build EAFs in France at Dunkirk.
ArcelorMittal said it remains dedicated to enhancing the carbon footprint of its facilities. However, as announced in April, it is becoming increasingly unlikely that the company will meet its 2030 CO2 reduction targets. This reflects a broader trend, as the energy transition is clearly advancing more slowly than anticipated across all sectors.
Imported steel and declining prices worsen outlook for European steel industry
The European steel market is still struggling with slow demand from all key steel-using sectors amid high imports, despite the trade measures put in place, according to sources.
Earlier this year, the European steel industry association, Eurofer, downgraded its outlook for apparent steel consumption across the EU for 2025.
According to Eurofer’s latest report, published on June 5, apparent consumption was expected to shrink by 0.9% to 128 million tonnes in 2025, compared with 129 million tonnes in 2024. This was a downward revision from the previous forecast in early-February of a slight recovery.
Carbon steel imports to the EU in 2024 totaled 26.36 million tonnes, up by 6.4% compared with 24.78 million tonnes in 2023, Eurofer data shows, and in the first quarter of 2025, steel imports to the block totalled 6.2 million tonnes.
Sources estimated that imports share in domestic steel consumption in Europe was around 30% in 2024.
Prices for HRC in Europe started to increase at the beginning of the year due to a pick-up in apparent demand, but the upward trend only continued until early-May, after which prices started to decline.
In April, Fastmarkets’ steel HRC index, domestic, exw Northern Europe averaged €652.74 per tonne. Since then, the average monthly price of HRC has been sliding, with the daily index reaching €590.00 per tonne on June 19 – its lowest level since January 31, 2025.
Short-term expectations on green steel remain quite pessimistic amid a lack of real demand and mounting import pressures, sources told Fastmarkets.
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