Speaker: Daryna Patiuk, Operations Director, Defense Industry Analyst, Eastern Circles

Moderator: Anastasiya Shapochkina, President of Eastern Circles

Steel is the backbone of defense, used everywhere, from tanks, to warships, to missiles. Therefore, defense autonomy is tied to the domestic steel industry. For Europe, however, this link has turned into a vulnerability.

The European steel production has declined by 16% since 2021, in the face of high energy and labor costs, global overcapacity, and rising import pressure from Asia. Since 2010, the sector has shed over 100,000 jobs, and 32 out of 47 blast furnaces are set to close all over Europe in the next 10 years. The recent near-closure of British Steel’s blast furnace under Chinese ownership serves as a powerful warning: control over critical industries directly translates to a loss of sovereign control. 

Main competitors are China and Russia, strategic allies, of which Russia has been called a military threat by NATO, the EU, and individual member-states. This geopolitical context turns cost-efficiency of steel imports from Russia and China into a strategic risk for Europe. It also gives extra leverage for the supplying countries, leaving Europe exposed to political pressures and supply disruptions, which could cripple European defense capabilities.

Europe’s reliance on imported semi-finished steel products, particularly steel slabs, is a stark example. Eastern Circles report on the topic shows that in 2024, 65% of all European slab imports came from Russia. This dependency is driven by cost, as Russian slabs are ⅓ cheaper than European alternatives, making them a lifeline for independent rerolling companies that process them into finished goods. Critically, these companies benefit from a loophole in EU sanctions that allows limited imports of Russian steel slabs. The loophole undermines the very purpose of the sanctions, with two major European rerolling companies, NLMK Europe and Marcegaglia, having direct ties to Russia. 

NLMK in particular is the key supplier of specialized electric steel to the Russian military-industrial complex, used in cruise and ballistic missiles. Europe’s reliance on steel imports creates a significant strategic vulnerability. It would undermine Europe’s defense capabilities, as a sudden disruption in steel supply from Russia or China is possible, and likely, given the current rising tensions along the Russia-NATO borders.