Antonio Marcegaglia, CEO of the Italy-based Marcegaglia Group, has expressed a fairly positive outlook for European steel demand in 2026, citing early signs of price recovery and anticipated supply-side constraints. Despite current demand not being brilliant, underlying trends remain somewhat positive, with expectations of gradual improvement fueled by destocking after excessive inventory build-ups across the supply chain.

Marcegaglia predicts an overall annual increase in consumption, particularly in the second half of 2026, as destocking effects take hold. He foresees slower apparent demand in the first quarter due to inventory overhang but expects final demand to trend slightly positive, with stronger recovery later in the year. Key sectors like infrastructure spending in Germany and the mechanical engineering sector are poised for better performance, while automotive demand is likely to stabilize rather than decline further.

A pivotal factor influencing this outlook is the supply side, particularly a sharp decline in steel imports into the EU. Existing safeguard measures will be replaced, and the rollout of the EU's Carbon Border Adjustment Mechanism (CBAM) from January 1, 2026, is expected to deter shipments due to associated uncertainties. Marcegaglia estimates imports could drop by at least 50% in the second half, with contractions also in the first half, potentially leading to a 35-40% annual reduction.

This supply tightening has already manifested in firmer prices. European hot-rolled coil (HRC) prices, which bottomed at around €530-540/mt, have rebounded by nearly €100/mt. Marcegaglia notes significant upside potential continues, bolstered further by CBAM, which could add €40-100/mt to costs, representing 8-10% of product value. Default CBAM values are slated for mid-December publication, with actual values clarified in February due to ETS updates and bureaucratic complexities.

In parallel, Marcegaglia Group advances its flagship low-carbon steel project at Fos-sur-Mer, France. Currently in the engineering phase with partner Danieli, it has secured positive public permitting orientation. Construction starts in Q3 2026, targeting production by end-2028. The facility will use 100% scrap and direct reduced iron (DRI), powered by nuclear electricity for full decarbonization, enhancing competitiveness.

To ensure DRI supply, discussions are underway for structured purchases from Mediterranean projects in Libya and Oman, Central Africa, and Australia—focusing on agreements rather than equity stakes. Locally, a small equity investment in the nearby Gravity project, producing 1.5 million mt/year of hydrogen-based green DRI, provides strategic proximity for future integration.

This project aligns with broader European steel industry shifts toward sustainability amid CBAM and ETS changes. Free allowances under ETS phase out from 2026-2034, pressuring high-emission producers while incentivizing cleaner technologies. Marcegaglia's insights underscore how trade measures and decarbonization initiatives could reshape market dynamics, supporting price floors and encouraging investments in green steel production.

For steel professionals, this signals opportunities in automation, non-contact measurement, and secondary metallurgy upgrades to optimize scrap and DRI processing. Mill operators and equipment suppliers should monitor CBAM technical details closely, as they impact cost structures and procurement strategies. Partnerships like those with Danieli highlight the role of engineering firms in enabling low-carbon transitions.

Overall, Marcegaglia's perspective offers strategic value, emphasizing destocking, import curbs, and project milestones as catalysts for stabilization. System integrators and technology providers can leverage this momentum in areas like IT/software for emissions tracking and materials handling for efficient scrap flows. The Fos-sur-Mer initiative exemplifies how R&D and sustainability strategies position European steelmakers for long-term competitiveness in a CBAM era.

Stakeholders in rolling, strip processing, and heat treatment furnaces should prepare for evolving quality raw materials demands, focusing on high-grade scrap to minimize impurities in EAF operations. Preventative maintenance and inspection technology will be crucial to ramp up production timelines without disruptions. This comprehensive view integrates economic forecasts with actionable business insights for the sector.