- Zinchenko: CBAM will change the economics of steel trade from 2029 and 2030
- Stanislav Zinchenko: Ukraine's reconstruction may generate demand for 40–70 million tons of steel
- Zinchenko: Whoever owns the cheapest energy and best raw materials will own the future steel advantage
- Zinchenko: India is the rising power reshaping the global steel market
The iron and steel industry in 10 to 15 years will not be as we know it today. This is how Stanislav Zinchenko, CEO of GMK Center and Chairman of the Environmental and Sustainable Development Committee at the European Business Association, reads the ongoing transformation in the global steel industry, which is gradually shifting from an open market model to more regional markets, under pressure from excess production capacities, slowing demand growth, rising trade protectionism, increasing energy costs, and emission reduction requirements.
Zinchenko places steel demand at the heart of the equation, considering that the European problem is not solely about imports, after EU steel exports declined by about 12% during 2025, and the competitiveness of European producers has weakened against China, ASEAN countries, and Turkey.
Conversely, India is consolidating its position as the fastest-growing steel market globally, with continued growth expected over the next ten to twenty years and increasing influence on global supply and demand balances, while China's exports remain at high levels with declining domestic consumption.
Energy and raw materials are redrawing the production map. With the expansion of the DRI-EAF route, energy could account for about 40% of steel production costs when using hydrogen, making energy one of the most important determinants of competitiveness and production location.
Conversely, low energy costs offer the Middle East and North Africa an opportunity to become a major hub for DRI and HBI production, with the potential for HBI produced in the region to enjoy a cost advantage of up to about 100 euros per ton compared to European producers.
In the scrap market, trade restrictions are increasing, with 48 countries imposing export restrictions, and 40% of them completely banning exports. Meanwhile, European scrap prices are expected to rise by 15-20% by the end of 2026, according to Zinchenko's estimates, coinciding with expectations of falling iron ore prices due to reduced Chinese steel production in 2026 and 2027.
Ukraine is at the heart of this transformation. The idleness of the Mariupol complexes, led by Metinvest's Azovstal and Ilyich plants, has resulted in the loss of significant production capacities and created a gap in the production of flat and section steel. Zinchenko believes that the reconstruction of the Ukrainian industry will not be a return to the traditional BF-BOF model, but rather a transition to a low-carbon industry that leverages iron ore resources and proximity to the European market, which accounts for about 90% of Ukraine's steel exports.
Reconstruction provides a massive demand base for this transformation. Investment needs in Ukrainian infrastructure are estimated at about 500 billion euros, which could generate demand for steel ranging from 40 to 70 million tons over a period that could extend to ten years. At the same time, Ukraine could reach an export capacity of approximately 7 million tons of iron ore pellets for direct reduction by 2030.
In terms of trade and carbon, Zinchenko expects the impact of CBAM to double by 2029 and 2030 with rising carbon prices and declining free emission allowances. Meanwhile, the European steel industry is moving towards reducing reliance on blast furnaces and increasing the role of electric arc furnaces, while the global production map is heading towards separating iron production from steel production, so that direct reduction pellets and HBI are transferred from regions with competitive energy and raw materials to steel production centers.
With nearly 20 years of experience in industrial consulting, including about 8 years focused on iron and steel, decarbonization, markets, and industrial policies, Zinchenko, in his interview with the Arab Iron and Steel Union Media Center, offers a direct reading of the transformations that are redistributing production, trade, raw materials, and energy between China, Europe, India, Ukraine, and the Middle East and North Africa.
A New Era for the Steel Industry
The Global Iron and Steel Industry Faces Structural Transformation
• The global iron and steel industry is undergoing a highly complex phase characterized by excess production capacity, weak demand in several major markets, a changing trade landscape, rising energy costs, geopolitical tensions, and accelerated efforts to reduce emissions. Do you believe we have truly entered a new era for the steel industry? And what are the most prominent features that will define the industry's shape over the next decade?
Undoubtedly, the global steel market map has changed radically over the past few years, and I believe that the iron and steel industry in 10 to 15 years will not be as we know it today.
There are a set of global trends that will drive this transformation, foremost among them are slowing demand growth, excess production capacity, increasing regionalization of trade, accelerated decarbonization efforts, and the race for low-cost energy. Additionally, there is an important trend of separating iron production from steel production, allowing for the production of reduced iron in regions with competitive advantages in energy and raw materials, and then transporting it to other regions for steel production.
The global industry faces what can be described as a _double squeeze_; on one hand, there are weak market conditions, high energy costs, and excess production capacity, and on the other hand, there is an urgent need for massive investments to reduce emissions and achieve green transition.
This situation is increasingly pushing governments to adopt protectionist policies and support domestic steel producers, aiming to create conditions that allow the industry to maintain its competitiveness and finance its future investments.
Towards a Gradual Fragmentation of the Global Steel Market
• Steel trade has become more linked to customs duties, protectionist measures, and anti-dumping investigations, in addition to carbon legislation and regional trade agreements. Are we witnessing a gradual shift from an open global steel market to more isolated regional markets?
Yes, I agree with this assertion. The regionalization of steel trade has become a clear global trend.
On one hand, these policies represent an attempt to protect domestic markets from growing imports and foreign competition. On the other hand, they reflect shifts in economic policies in developed countries, where protectionist ideas have become more prevalent in industrial sectors, coinciding with political shifts towards the right in several of these countries.
Notably, this trend does not recede even when market conditions improve. On the contrary, when economies enter slowdown cycles, we typically see an increase in measures aimed at restricting imports.
There are not many fully open markets left in the world, and with every new trade barrier, the pressure on markets that still maintain their openness increases.
A new form of trade barriers has also emerged, justified by climate objectives. The most prominent example is the European Carbon Border Adjustment Mechanism (CBAM). This mechanism has been implemented in the EU but has also attracted the attention and study of other countries such as Canada, Australia, the United States, and Vietnam.
Chinese export pressure
• China's steel exports have become a major concern for steel producers in many regions. Do you expect Chinese exports to remain structurally high, or could economic and industrial changes within the Chinese market lead to a significant decline in exports?
We expect China's steel exports to remain high.
The Chinese government is not currently taking strict directive measures to reduce production or restrict exports. At the same time, a trend of declining domestic consumption has become evident.
This decline is not limited to the construction sector but also extends to capital investments and car sales within the Chinese market.
Consequently, the imbalance between supply and demand in the Chinese market will continue to push large quantities of steel into foreign markets. We do not foresee sufficient factors in the next few years that could fundamentally reverse this trend.
The United States and a New Model of Industrial Protection
• The United States is increasingly using tariffs and other trade policy tools to protect its domestic steel industry. Do you believe Washington is establishing a new model for strategic protection of the steel industry? And could other countries and regions follow suit?
Yes, the United States was among the first to push for the regionalization of steel trade back in 2018, and its model now serves as a reference for the policies of several other countries and regions.
The European Union has also adopted this trend by proposing a stricter system to limit steel imports through Tariff Rate Quotas (TRQs).
For low-carbon steel projects in Europe to succeed, carbon pricing and public funding alone have proven insufficient. Projects require stable, long-term market conditions that ensure the recovery of investments amounting to billions of dollars.
Under current price levels, achieving this is extremely difficult. Therefore, protecting the European market, from the perspective of policymakers, creates the conditions that steel producers need to implement their investments.
India is also moving towards protecting its domestic market, and we are witnessing increased activity in anti-dumping investigations in Turkey.
Europe Under Pressure
• European steel producers face a combination of high energy prices, weak demand, import competition, and the enormous costs of transitioning to low-carbon production. Can Europe maintain its global competitiveness as a major steel-producing region under these conditions?
The competitiveness of European steel is declining, and this is not limited to steel alone but also extends to finished products and the sectors that rely on it.
We saw a clear indicator of this in 2025, when EU steel exports decreased by approximately 12%.
In the current price environment, Europe simply cannot compete with China, ASEAN countries, and Turkey in global markets.
Therefore, European export opportunities will be more focused on high value-added products.
The focus should be on developing new products such as lightweight, high-strength, and formable steel grades.
European companies have strong R&D capabilities and can leverage this advantage to offer advanced products and technologies to global markets.
What Does Europe Really Need?
• In your opinion, what is the biggest mistake Europe could make in dealing with the steel industry at this stage? And what priorities should European policies focus on instead?
The European Union is moving towards limiting competition to protect domestic steel producers, but the core problem lies not solely in imports but in stagnant steel demand.
It is true that import restrictions have already started to raise prices, and we may not have reached the peak of this increase yet. However, higher profit margins will encourage the restart of inefficient production capacities that were previously idled. Once domestic supply begins to rise, prices will inevitably fall again because we do not see indicators of significant improvement in demand.
This will lead to demands for more import restrictions, then more restrictions, and so on. It is a vicious cycle that the United States has already entered into a part of.
The fundamental issue, therefore, is steel demand.
It is logical for Europe to focus on stimulating steel-consuming sectors that are currently losing ground to China. I believe European authorities are well aware of this problem, which is why several countries have announced fiscal expansion plans and increased infrastructure investments.
An action plan for the automotive sector has also been announced. As time passes, these measures should gradually begin to improve the situation.
India – The New Growth Source for Global Supply
India is rapidly expanding its steel production and has ambitious plans to add new production capacities. Could India become the most significant source of global steel supply growth outside of China? And how might this impact the markets in Europe, the Middle East, North Africa, and Asia?
Yes, this is the trend we anticipate.
India is the fastest-growing steel market in the world, and this is likely to remain the case for the next ten to twenty years. As the Indian market expands, its influence on the global steel industry will gradually increase.
However, the main issue lies in the fluctuations between supply and demand. The commissioning of new production capacities does not always coincide with periods of demand growth. There is also the factor of seasonality; when demand weakens in the Indian domestic market, exports increase.
These fluctuations represent one of the risks that the global steel industry must monitor in the coming years.
Ukraine and the Future of European Steel
Historically, Ukraine has been one of Europe's most important countries for iron ore and steel production. In the reconstruction phase, should the Ukrainian industry revert to its traditional model, or is this an opportune moment to build a new, more modern, and lower-carbon industry?
Ukraine has no other option but to transition to low-carbon steel production.
This is essential from two perspectives: the first relates to the European CBAM mechanism, and the second to Ukraine's economic and industrial integration with the European Union.
Ukraine is currently working on developing a law for a national emissions trading system, which implies a gradual transition to carbon pricing levels close to those in the EU.
Under these circumstances, it will be difficult for the traditional production model based on blast furnaces and basic oxygen furnaces (BF-BOF) to continue in its current form.
Of course, the green transition presents a significant challenge for the Ukrainian steel industry. Its success requires three key elements: access to low-cost European financing, competitive energy prices, and an effective government regulatory framework.
Before the war, all Ukrainian steel companies had developed plans for emission reduction and decarbonization. These plans were temporarily halted due to the war, but we believe that once it ends, companies will be ready to relaunch their transformation projects.
It is too early to determine the final technological path Ukraine will follow, especially since even European strategies themselves are under review.
On one hand, Ukraine has a very strong position for developing Direct Reduced Iron (DRI) production, and on the other hand, a number of companies have announced feasibility studies for projects based on Electric Arc Furnaces (EAF).
For example, Interpipe, a leading Ukrainian global manufacturer of steel pipes and railway products, announced plans to increase its EAF capacity and enter the flat products sector, while Dnipro Metallurgical Plant (DMZ), a Ukrainian company specializing in iron, steel, and metal products – currently idle – announced its intention to study the establishment of an EAF.
Reconstruction of Ukraine... A Huge Industrial Opportunity
• The reconstruction of Ukraine will require enormous quantities of steel, building materials, and industrial products. Can reconstruction represent a new opportunity to revive the Ukrainian steel industry? And what does the industry need to regain its global competitiveness?
Thank you for this question. Ukraine faces immense needs for infrastructure investment, not only to rebuild assets and facilities destroyed by the war but also to replace and upgrade outdated infrastructure dating back to the Soviet era.
According to Ukrainian government estimates, infrastructure investment needs amount to approximately 500 billion euros, a very substantial figure that simultaneously represents a tremendous opportunity to create demand for steel.
Based on the steel intensity of infrastructure projects implemented by China over the past ten years, the demand for steel required for Ukraine's infrastructure reconstruction programs could range between 40 and 70 million tons, spread over a period that could extend up to ten years.
More precise estimates are not possible at this time due to the lack of detailed and specific reconstruction plans. However, these figures nonetheless provide a clear picture of the potential demand and the magnitude of the available opportunity.
The potential is enormous, but meeting the necessary supply could be a challenge in itself, especially since some products, such as flat steel and steel sections, are not currently produced in Ukraine due to the loss of significant production capacities in Mariupol. Mariupol, a coastal city on the Sea of Azov, was the historical capital of the Ukrainian mining sector, hosting giant industrial fortresses with its strategic port, responsible for over a third of the country's metal production. This global weight was concentrated in two main plants belonging to the Metinvest group: the first is the Azovstal plant, with an annual output exceeding 4 million tons of crude steel for shipbuilding, giant international bridges, and railway tracks; the second is the Ilyich plant, which housed Europe's largest iron ore sintering complex.
The Mariupol plants were distinguished by their production of pure neon gas as a byproduct, a vital material exported globally for the semiconductor industry and advanced electronic chips. With the outbreak of war and the city's siege in 2022, Mariupol went completely out of service due to its infrastructure and smelting furnaces suffering intense artillery and aerial bombardment that completely destroyed their production lines. The Azovstal plant, in particular, became a fierce battlefield due to its fortified underground tunnel network until the city fell under Russian control, making the revival of the industrial complex almost impossible, and authorities moved to cancel its mining status.
This complete paralysis represented a structural shock to the Ukrainian economy, as the country was deprived of its main export gateway and primary industrial pillar, creating a huge production gap that forced companies in other cities to completely reorder their priorities.
Ukraine and European Value Chains
• Can Ukraine's integration into the European industrial system create a new steel value chain linking its raw material resources, production capabilities, and European markets?
Ukraine has always been part of European supply chains, but this relationship has significantly strengthened since 2022. The European Union has effectively become the primary, almost sole, export market for Ukrainian steel producers, accounting for up to 90% of their exports.
The integration of the Ukrainian steel industry into Europe is also advancing through Mergers and Acquisitions (M&A), as Ukrainian companies are moving to acquire European industrial assets.
The year 2025 saw a number of merger and economic integration deals, including the acquisition of pipe plants located within the European Union by the Ukrainian companies Interpipe and Metinvest. This strategic move aimed to transition to more advanced stages in the value chain and ensure direct and secure access for their products within targeted European markets, away from customs restrictions.
Metinvest, the Ukrainian mining and steel giant, is also working on a project to establish an advanced plant based on Direct Reduced Iron and Electric Arc Furnace (DRI-EAF) technology in Italy. The company was also among those interested in acquiring several other European industrial assets, but the introduction of the Tariff Rate Quotas (TRQs) system in July severely restricted Ukraine's exports, with a decrease of about 60% compared to 2025.
Despite the preferences that Ukraine was supposed to receive, it has been practically more harmed by the quota system than other countries.
This is clearly demonstrated by the 35% month-on-month decline in Ukrainian steel production in July; the quota system was a major factor behind this decline.
Certainly, the continuation of these restrictions hinders the deeper integration of Ukrainian companies into European value chains.
Ukraine's Natural Advantage
• Ukraine possesses significant iron ore reserves, accumulated industrial expertise, and a geographical location close to Europe. Can these advantages make it a key supplier to Europe of low-carbon iron, DRI, HBI, and steel?
Under favorable market conditions, Ukrainian mining companies can currently supply up to 3.3 million tons of direct reduction grade iron ore pellets (DR-grade pellets) to the global market.
These production capabilities come from the mining complexes of Metinvest, the mining and steel giant—alongside Ferrexpo, one of the world's largest producers and exporters of high-quality iron ore pellets, whose facilities are currently still idle.
There is another project by Metinvest, for which an investment partner is being sought, targeting the production of approximately 4 million tons of direct reduction grade iron ore pellets.
By 2030, Ukraine could therefore reach an export capacity of around 7 million tons of DR pellets for the global market.
However, Ukraine's long-term potential is much greater. With the potential to produce at least 20 million tons of direct reduction feed materials in the long term, Ukraine could play a crucial role in balancing the global direct reduction pellet market.
Will Ukraine return to the MENA markets?
• Before the disruption of trade through the Black Sea, Ukrainian ores and products had a significant presence in the MENA markets. Do you expect Ukrainian supplies to return strongly to Arab markets after the war ends? And which Arab countries could become key partners for Ukraine?
The MENA market is one of the fastest-growing steel markets in the world, and therefore receives significant attention.
However, under current conditions, with rising energy costs in Ukraine, high logistics costs, and numerous challenges associated with the war, it would be unrealistic to expect Ukrainian exports to return to significant levels.
Furthermore, competition in the MENA markets with products from China, Russia, and Turkey will be difficult for Ukrainian suppliers.
After the war ends, reconstruction programs themselves could reduce the incentive to export, as local factories will need to increase their supply to the Ukrainian market.
Therefore, maintaining a presence in the MENA markets may be important for the continuation of trade relations, but volumes are unlikely to reach significant levels in the near term.
Ores, DRI, HBI, and Scrap
A New Race for Ores
• As the steel industry transitions towards lower-emission technologies, demand for high-quality iron ore, direct reduction pellets, and scrap, and possibly hot-briquetted iron (HBI), is increasing. Could the availability of high-quality ores become one of the most important competitive advantages for the steel industry over the next decade?
Certainly, we are already witnessing a global race to secure ores to ensure the sustainability of steel production amidst technological shifts. Scrap is at the forefront of these materials, and therefore, restrictions on its export are becoming an increasing global trend.
The problem is that no one knows precisely the capacity of each economy to generate the required quantities of scrap. Scrap is not a commodity for which any quantity can simply be produced by injecting investments. There is also uncertainty regarding future demand levels.
Nevertheless, the DRI and EAF routes currently enjoy a degree of flexibility, and we believe the global market will eventually find a balance in ore supplies. However, the decisive factor in determining competitiveness will be the price of energy.
When transitioning to the DRI-EAF route using hydrogen, steel production's energy consumption intensity will increase by about eightfold, while the share of energy in the cost of steel production will rise to about 40%.
Consequently, energy will become the most crucial raw material in steel production, gradually replacing the traditional importance of both iron ore and coal in terms of their impact on cost.
Scrap: From a Global Commodity to a Strategic Material?
• With the expansion of steel production via electric arc furnaces, competition for high-quality scrap will increase. Could scrap become a strategic material, rivaling iron ore in importance? And could scrap export restrictions reshape the global steel trade map?
Yes, we believe scrap will gradually become a primarily domestic material.
In recent years, global scrap trade has hovered around 100 million tons, a volume that is not large. More importantly, it is not growing as rapidly as we might expect, despite the increase in global steel production and the gradual rise in the share of electric furnaces.
Currently, 48 countries have imposed restrictions on scrap exports, while 40% of them have completely banned exports.
Discussions within the European Union, one of the world's largest scrap exporters, have quieted down for now, but they could resume as soon as scrap prices rise. Tightening tariff quotas in Europe would require increased steel production within the EU, which in turn would lead to higher demand for scrap.
We expect scrap prices in the EU to rise by about 15-20% by the end of the year compared to current levels. Turkey, as one of the largest global importers of scrap, will be most affected.
Conversely, this could create an environment conducive to increased exports of semi-finished steel products from Asia.
I believe that in 2026 and 2027, we will witness an interesting development: a decline in iron ore prices coinciding with a decrease in steel production in China, versus a strong possibility of rising scrap prices.
DRI and HBI: Where Will the Global Production Centers Be?
• The role of direct reduced iron (DRI) and hot-briquetted iron (HBI) is growing in the transition towards low-carbon steel production. Which regions do you see as most qualified to become global centers for DRI and HBI production?
It is very likely that in the future, there will be a separation between iron production and steel production.
Regions such as the Middle East and North Africa, with their access to low-cost energy, have clear advantages for developing DRI and HBI projects.
If we talk about DRI production based on natural gas, our estimates indicate that HBI produced in the MENA region could have a cost advantage of up to approximately €100 per ton compared to European producers.
We are already seeing the beginning of this trend in Europe. Although the DRI-EAF route has theoretically become the dominant pathway in European decarbonization plans, steel companies are practically beginning their transition through EAF projects, anticipating reliance on importing lower-cost hot-briquetted iron (HBI).
CBAM will also support demand for HBI, as hot-briquetted iron can have a carbon cost advantage of up to approximately €110 per ton compared to pig iron.
As emission costs rise, pig iron will become more expensive and may lose its competitive edge against HBI in some markets.
The Future of Electric Arc Furnaces
• Do you expect the global steel industry to decisively shift towards greater reliance on electric arc furnaces (EAFs), or will traditional blast furnaces remain dominant for longer than many analysts predict?
According to our estimates, steel production via blast furnaces in the European Union will significantly decline over the next ten to fifteen years.
In Europe, we will see a gradual phase-out of blast furnaces as licenses expire and major refurbishment operations are needed. Rising carbon prices will also increase pressure on this production route.
However, on a global scale, we do not see the same reasons driving such a significant shift at present. Therefore, the blast furnace route will remain present in many markets for a longer period.
Green Steel: Between Ambition and Economic Viability
• The world is witnessing huge announcements about investments in green steel, but the industry still faces high costs and unclear demand. When do you expect low-carbon steel to become commercially economically competitive, without significant reliance on government support?
We are indeed seeing a large number of announcements related to investment in green steel, but the actual investment decisions made can be counted on one hand. There is indeed a real issue with competitiveness.
The DRI-EAF route is economically logical but is more viable in specific regions with low-cost energy.
Currently, there is a slowdown in the implementation of a number of previously announced projects, and I do not believe we will see significant quantities of HBI or low-carbon steel coming from the MENA region within the next five years.
Steel production via EAF using scrap appears to be economically viable at present.
However, rising scrap prices can reduce the economic advantage of this route compared to the blast furnace. Without government support, the full economic balance between these routes may not be achieved before 2030, when significant quantities of HBI begin to appear in the global market.
Who will pay the bill for decarbonization?
• The transformation of the steel industry towards low-carbon production requires massive capital investments. Who ultimately bears the cost of this transformation: steel companies, governments, consumers, financial institutions? Or does it require a participatory model that combines these parties?
This is an important question, and we have already seen different models.
We have, for example, the American model where the end-user bears a significant part of the investment cost indirectly through tariffs.
Tariffs raise steel prices in the domestic market and provide higher profit margins for producers, thus giving steel companies a source to finance their investments.
The European model initially relied on public sector participation in project financing, averaging around 40% of the funding. In other words, the European state effectively bore a significant part of the cost of the green transition.
However, we are now seeing the European Union also returning to the American model, by imposing its own tariffs and trade protection measures.
CBAM... Will it change the game?
• The European Carbon Border Adjustment Mechanism (CBAM) has become an influential factor in the economics of steel trade. Do you believe it will indeed accelerate emissions reduction globally, or could it simply shift production towards regions with cheaper energy and lower production costs?
So far, CBAM has not become a complete game-changer, and most traditional suppliers continue to export to the European market.
The biggest negative factor to date has been the uncertainty surrounding the mechanism's implementation and future developments.
However, CBAM's impact will become much greater in 2029 and 2030, coinciding with rising carbon prices and the gradual phasing out of free emission allowances.
The impact may be particularly evident in the long products and pig iron segments.
In the flat products segment, however, the availability of low-carbon products remains very limited, and thus the increase in import costs is ultimately passed on to the prices of final products.
This means that CBAM's impact will not just be a matter of import costs, but will gradually extend to the price structure, competitiveness, and global supply chains of steel.
