An aerial view of the Salzgitter AG site. Losing Germany’s domestic steel production could cost the country up to €50 billion ($58 billion) per year, a study published on Tuesday shows, ahead of a key summit for the sector in Berlin. Credit: Julian Stratenschulte/dpa
Losing Germany’s domestic steel production could cost the country up to €50 billion ($58 billion) per year, a study shows, ahead of a key summit for the sector in Berlin.
The analysis by economists at the University of Mannheim, seen by dpa, said the German economy would be highly exposed to a global steel crisis if domestic steel companies close down or offshore their production.
Such a scenario, in which major steel exporters such as China could slash deliveries to Europe due to geopolitical conflicts or supply chain issues, would lead to prices surging for downstream industries in Germany.
These include construction, metal production, mechinal engineering and the automotive sector, all of which are heavily reliant on steel.
“This cost surge would reduce production and thus value creation in these sectors,” the study said. The crisis would also reduce household incomes, in turn affecting domestic demand.
“But even a gradual decline in the steel industry would have economic and political consequences,” wrote the study’s authors, Tom Krebs and Patrick Kaczmarczyk.
Steel-producing German cities and regions such as Duisburg, Eisenhüttenstadt, Bremen and Saarland would be particularly affected.
A decline in steel production would also have political effects, the study argued.
Experience from the United States and Britain has shown that economic decline in industrial regions is often accompanied by a rise in populist movements.
“This also applies to Germany: a policy that abandons key industries not only weakens the economy, but also democratic stability,” the researchers said.
In the long term, Germany requires production of at least 40 million metric tons per year in order to meet demand, the study found.
Around 37 million tons of crude steel were produced in 2024.
According to the authors of the study, half of the target quantity should be produced using a low-carbon direct reduction process, and the other half should be melted in electric furnaces from steel scrap.
In order to achieve this, more investment is needed in facilities for climate-friendly steel production, the authors emphasized.
The study was funded by the Hans Böckler Foundation, a Dusseldorf-based think tank with close ties to trade unions.
A steel summit, called by Chancellor Friedrich Merz, is due to take place on Thursday in Berlin.
The summit is to focus on measures to increase the competitiveness of the German steel industry.
