Germany’s steel sector has been in a severe crisis for a number of years due to rising energy costs and an influx of cheap Chinese imports.
In an attempt to support the industry, Chancellor Friedrich Merz met with important business leaders in Berlin on Thursday. Here are some queries and responses regarding the topic:
What makes steel crucial to Germany?
Steel production, which increased in line with railroad building, military build-ups during two world wars, and the 1950s economic boom, is closely associated with Germany’s position as a leading industrial nation.
The country remains Europe’s top steel producer, and the seventh largest in the world, according to the World Steel Association.
Steel is widely used in many sectors in Europe’s biggest economy, from construction to automotive and mechanical engineering, and is an essential component of exports.
The sector directly employs only around 80,000 people, according to German industry federation WV Stahl, with many working in the traditional industrial heartland of the Ruhr.
But steel-intensive sectors employ around four million people, accounting for two out of three industrial jobs, according to the federation.
Why is the sector in crisis?
China, the world’s top producer, has for years been flooding world markets with large quantities of steel at knock-down prices, undercutting German and European producers.
When Russia invaded Ukraine in 2022, energy prices skyrocketed, making matters worse for the energy-hungry industry. Even if they have since decreased, they are still far higher than pre-war levels.
Germany’s steel output has recently stagnated at 10 to 15 percent below 2022 levels.
According to the Agora Industrie think tank, a fourth of the nation’s steel factories were temporarily closed in 2024.
In the meantime, the old titans of the industry are in danger of going bankrupt. By 2030, Thyssenkrupp intends to reduce production by about 30% and lay off about one-third of the employees in its steel division.
What are the solutions?
The talks convened by Merz will bring together the country’s top producers as well as leaders from states where the industry is a major employer, in a bid to “increase competitiveness and the future prospects” of the sector, a government spokesman said.
The meeting is a key step in “paving the way” to come up with measures to help the industry, he said.
One key aim is to clarify Berlin’s position on the European Commission’s radical plans to protect the continent’s steel industry from cheap foreign imports.
In early October, it proposed hiking levies on steel imports to 50 percent and slashing the volume allowed in before tariffs apply by 47 percent.
It mirrors a strategy embraced by US President Donald Trump, who has imposed 50-percent tariffs to keep out cheap metals from China.
Germany’s leading industrial union IG Metall considers the EU’s proposals “fair”, a spokesperson told AFP, urging the government to “clearly defend” them.
Berlin is also planning to begin a scheme in January to subsidise power costs for industry, which Economy Minister Katherina Reiche said will be “key to the competitiveness of steel”.
A green future?
The talks will address the issue of decarbonisation, with the sector betting on the production of “green” steel — produced using hydrogen derived from renewable energies — to meet climate goals.
But the shift is challenging as it requires huge investments from steel companies with already strained finances.
Thyssenkrupp’s plans to produce green steel at its historic site in the western city of Duisburg were originally scheduled for 2027 but they are now hanging in the balance.
Indian group Jindal, which recently made a takeover bid for Thyssenkrupp’s steel unit, has pledged to advance the group’s green ambitions if it takes control.
Merz has in the past faced criticism for questioning whether green steel can be produced competitively on a large scale.
Agora Industrie director Julia Metz urged the government to “send clear political signals” and “create investment security” for the shift to green steel.
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