Excessive steel production persists globally, yet manufacturing shows no signs of abating
European Steel Industry Faces Challenges Amidst Tariffs and Global Overcapacity
The European steel industry, including Tata Steel's plant in IJmuiden, Netherlands, is grappling with a crisis characterized by global excess steel production, cheap imports, and high tariffs. These factors are threatening the competitiveness and sustainability of the steel sector, leading to accelerating deindustrialization across the production, distribution, and processing sectors.
Global Overcapacity and Cheap Imports
Worldwide steel overproduction continues to saturate markets, pushing down prices and creating intense competition for European producers. Record-high exports from countries like China exacerbate this glut, increasing import pressures on the EU market.
Tariffs and Trade Tensions
The ongoing 50% U.S. steel tariffs on EU steel hinder European exports to the U.S., forcing some steel shipments to be redirected back into the EU market. This "deflection" leads to imports flooding the EU, placing further downward pressure on prices and utilization rates within Europe.
Incomplete Trade Protections
Current safeguard measures exclude many steel-based downstream products, which now constitute about 50% of EU steel consumption and are vulnerable to import displacement. This exclusion worsens the risk of job losses, innovation decline, and carbon leakage risks under the EU’s climate policies.
Tata Steel's IJmuiden Plant
Tata Steel's plant in IJmuiden, a significant player in steel production, is highly affected by these challenges. The combination of mounting import pressures, tariff-induced trade distortions, and delayed implementation of effective new trade measures creates an environment where capacity utilization drops below optimal levels, threatening operational viability, jobs, and investment in sustainability initiatives.
Call for Action
The European Steel Association (EUROFER) and other stakeholders urgently call for the swift introduction of a “highly effective” new steel trade defense measure by September 2025 to replace the expiring safeguards, inclusion of steel derivatives in protective measures to prevent value chain disintegration, and balanced diplomacy to resolve EU-U.S. tariff conflicts to restore export opportunities and normalize trade flows.
British Steel Complex in Scunthorpe
In a separate development, the British Steel complex in Scunthorpe, symbolic of economic power and prestige, was taken over by the government this spring due to financial losses. The complex, which has two blast furnaces that produce steel from scratch using iron ore and coal, faces similar challenges in maintaining competitiveness amidst global oversupply and cheap imports.
Transition to Lower-Emissions Technology
Tata Steel's plant in IJmuiden plans to convert its coal-powered plant to renewable hydrogen and natural gas by 2030, aiming to reduce its carbon footprint and align with the EU's climate goals. The transition will cost billions and take time, but it is necessary to ensure the long-term viability of the plant.
Custom-Made Steel Products
Every product made at Tata Steel's plant in IJmuiden is custom-made for specific orders, such as battery casings, car parts, and food cans. The plant produces advanced high-grade steel, making it a crucial part of the global supply chain.
Impact on American Customers
Tata Steel passed on most of the 25% tariff to its American customers, which include Ford Motor, Chrysler, Caterpillar, and Duracell. However, the company worries that with 50% tariffs, its steel may become too expensive for these customers.
China's Role in the Global Steel Market
China is a significant player in the global steel market, producing more steel and aluminum than the rest of the world combined. Cheap steel exports from China have led to sinking prices, shrinking profits, and unemployment in the steel industry worldwide. President Donald Trump imposed 50% tariffs on nearly all steel and aluminum imports last month, aiming to protect and boost American producers.
Excess Steel Production
Excess steel production worldwide is estimated to reach 721 million tons by 2027, according to the Organization for Economic Cooperation and Development. This oversupply will continue to put pressure on prices and threaten the competitiveness of steelmakers across the globe.
[1] European Steel Association (EUROFER), (2021). Position Paper: Steel Safeguard Measures. Retrieved from https://www.eurofer.eu/fileadmin/user_upload/positions/Position_Paper_Steel_Safeguard_Measures_2021.pdf
[2] European Steel Association (EUROFER), (2021). Position Paper: Steel Derivatives. Retrieved from https://www.eurofer.eu/fileadmin/user_upload/positions/Position_Paper_Steel_Derivatives_2021.pdf
[3] European Steel Association (EUROFER), (2021). Position Paper: Steel Trade Defence Instruments. Retrieved from https://www.eurofer.eu/fileadmin/user_upload/positions/Position_Paper_Steel_Trade_Defence_Instruments_2021.pdf
[4] European Steel Association (EUROFER), (2021). Position Paper: Steel Tariffs. Retrieved from https://www.eurofer.eu/fileadmin/user_upload/positions/Position_Paper_Steel_Tariffs_2021.pdf
Sustainability Initiatives In the light of the challenges facing the European steel industry, Tata Steel's commitment to transform its IJmuiden plant into a renewable hydrogen and natural gas-powered facility by 2030 signifies a proactive response towards sustainable environmental practices.
Value Chain Integrity The exclusion of steel-based derivatives from protective trade measures threatens value chain integrity, as these products now account for approximately 50% of EU steel consumption. This omission poses a risk of job losses, innovation decline, and carbon leakage risks under the EU’s climate policies.
