Germany

The German economy showed slight signs of recovery in the fourth quarter of 2025. GDP grew 0.2% compared with the previous three months, supported primarily by private consumption and higher government spending. However, a genuine recovery would seem to be a long way off.

Rising real wages and stable employment had a balancing effect, while industry cautiously consolidated towards the end of the year. However, these developments were offset by a renewed decline in exports, continued weakness in investment (particularly in the construction sector except for civil engineering) and a stagnating labour market. Although falling inflation rates improved overall conditions, the economic upturn remained fragile and was characterised by structural pressures.

The German steel market remained in crisis mode last year. Crude steel production fell to 34.1 million tonnes, around 9% down on the total for what was already a weak previous year, while capacity utilisation slipped below the critical 70% mark. Domestic demand was disappointing at an estimated 30 million tonnes, well below the multi-year average. At the same time, the industry suffered from a weak economy, increasing import pressure from third countries and structurally uncompetitive energy prices. Political counter-measures were initiated but had little effect.

Germany’s recycled steel market was also under considerable pressure in 2025. Logistical bottlenecks on roads, railways and waterways served to drive up transportation costs significantly. At the same time, a weak industrial economy, insolvencies and production relocations abroad weighed on volumes and squeezed margins. Falling recycled steel prices dominated for much of the year.

Supply risks appear set to increase in 2026. The German recycled steel industry will face shortages owing to weak industrial and construction output, persistently high cost and logistics pressures, and irregular demand from EAF steelworks. At the same time, volatile export markets, particularly Turkey, and increasing regulatory requirements are bearing down on the industry. Many dealers are struggling with declining margins and need to make their business models more flexible in order to survive in this generally difficult market environment. Further consolidation within the sector would seem likely.