Europe’s steel utilization is expected to reach 75pc annually in the next three years, according to McKinsey’s report. Steel producers, however, must aim to reduce surplus capacity by 25mn mt to 27mn mt to remain sustainable.
The report highlights two focal aspects to leverage the existing surge in steel demand. The first is to increase asset utilization, and the other is to decarbonize production.
Frank Bekaert, a senior partner at McKinsey, reiterated that producers must offset decarbonization investment costs in the near term. Local steel mills must also increase investments in sustainable technologies and innovation to achieve carbon neutrality in the long run, the report noted. Both short- and long-term measures are necessary for the sustainable future for European steel.
Steel demand in Europe recovered in the latter half of 2020 until early 2021 from 130mn mt to 149mn mt. The surge also drove prices up by 50pc between September 2020 and January 2021, the McKinsey report indicated.