Antonio Marcegaglia, chief executive of Italy-based steelmaker and reroller Marcegaglia Group, expressed a fairly positive outlook on European steel demand for 2026 during a recent interview. Despite current demand not being brilliant, he highlighted an underlying positive trend expected to strengthen through gradual destocking after excessive inventory build-ups across the supply chain. Marcegaglia predicts an overall annual increase in consumption, particularly in the second half of the year, as the system is currently overloaded with stocks, leading to slower apparent demand in the first quarter but a slight positive final demand with recovery later.

Infrastructure spending, especially in Germany, and the mechanical engineering sector are poised to perform better, while automotive demand is expected to remain stable rather than contract. The CEO emphasized that supply-side dynamics will play a decisive role, with steel imports into the EU forecasted to drop sharply. Existing safeguard measures will be replaced, and uncertainties surrounding the EU’s Carbon Border Adjustment Mechanism (CBAM) are discouraging shipments. Marcegaglia estimates imports could fall by at least 50% in the second half, with contractions also in the first half, potentially resulting in a 35-40% annual reduction.

This supply tightening has already manifested in firmer prices, with European hot-rolled coil (HRC) prices rebounding nearly €100 from lows of €530-540/mt. Platts assessed domestic HRC at €615/mt ex-works Ruhr and €595/mt ex-works Italy, alongside imported HRC at €500/mt CIF Antwerp and €495/mt CIF Southern Europe. CBAM, effective from January 2026, will exert further upward pressure, with estimates ranging from €40-60/mt to as high as €80-100/mt, representing 8-10% of product value. Default CBAM values are due mid-December, with actual values updated in February based on new ETS data, creating uncertainty that hinders precise calculations and forces market participants to rely on estimates.

Amid these market shifts, Marcegaglia Group is advancing its flagship low-carbon steel project at Fos-sur-Mer. Currently in the engineering phase with partner Danieli, the project has received a positive orientation from authorities. Construction is slated for Q3 2026, targeting production by end-2028. The facility will operate entirely on scrap and direct reduced iron (DRI), powered by nuclear-based electricity, achieving full decarbonization and enhanced competitiveness. To secure DRI, the group is negotiating structured purchase agreements with projects in the Mediterranean (Libya, Oman), Central Africa, and Australia, focusing on supply rather than equity stakes.

This strategic move underscores Marcegaglia's commitment to sustainability amid evolving trade and environmental regulations. The project's green credentials position it favorably in a market increasingly prioritizing low-carbon steel, potentially capturing premium pricing as buyer preferences shift. European steelmakers face broader challenges, including global overcapacity and high energy costs, but measures like CBAM and import quotas offer relief. Marcegaglia's optimism reflects confidence in policy-driven supply discipline restoring balance, enabling operating rates to improve and supporting a measured recovery. Industry stakeholders will monitor CBAM implementation closely, as its transitional phase through 2025 builds to definitive impacts in 2026. For steel professionals, this signals opportunities in scrap and DRI logistics, engineering partnerships, and compliance technologies. Marcegaglia's insights provide actionable intelligence for mill operators planning inventory and pricing strategies, equipment suppliers eyeing low-carbon projects, and traders navigating import volatilities. The interplay of destocking, policy enforcement, and green investments will define Europe's steel trajectory, with Marcegaglia's Fos-sur-Mer exemplifying proactive adaptation.

Further details on price assessments and project timelines highlight the immediacy of these developments. As European HRC stabilizes above €600/mt, downstream sectors like construction and engineering can anticipate cost predictability. Sustainability strategies, such as DRI sourcing diversification, mitigate raw material risks while aligning with EU decarbonization mandates. This comprehensive view equips B2B professionals with strategic foresight for 2026 investments and operations.