EU Industrial Accelerator Act: 25% low-carbon steel requirement in public procurement

The EU Industrial Accelerator Act (IAA) was set to form part of the EU's broader "Made in Europe" strategy, which aims to strengthen strategic autonomy by reducing external dependencies in critical manufacturing sectors. The automotive sector uses various raw materials, and the supply chains of modern electric or hybrid vehicles include various ferrous, non-ferrous, and battery materials. In recent years, the EU has been trying to incentivise industry while adhering to strict net-zero carbon emission regulations, despite the automotive sector's dependence on China for the processing of critical minerals for batteries. This has led to a series of policies. One is the "Made in Europe" programme to boost demand; the ResourceEU and CRMA frameworks aim to diversify the supply of critical raw materials such as lithium, graphite, and cobalt for batteries.

No recovery yet in EU industry

The Eurozone manufacturing purchasing managers' index stood at 49.5 in January 2026, remaining below the 50-point threshold that indicates European businesses are still contracting due to weak demand and production. The EU's domestic battery industry also recently called for additional support to develop an independent European battery supply chain, as gigafactory plans were cancelled.

Automotive suppliers have announced over 100,000 job cuts since 2024

European Automotive Suppliers Association (CLEPA) secretary Benjamin Krieger said: "This is not a trial run: automotive suppliers have announced more than 100,000 job cuts since 2024." In early versions of the draft legislation, steel was identified as a primary focus, and it was proposed that public procurement and state aid for steel should be conditional on low carbon emissions and EU origin. However, amendments made in the week ending 13 February represented a significant shift, softening the "Made in EU" rules and allowing certain third countries to be treated like EU producers in public procurement of key industrial goods.

25% of steel used in buildings, infrastructure, and transport projects must be low-carbon

In recently leaked IAA annexes seen by Fastmarkets earlier this week, public procurement procedures would require at least 25% of steel used in buildings, infrastructure, and transport projects to be low-carbon. A similar 25% threshold would apply to aluminium. However, the wording differed for the two materials. For steel, the text stated "at least 25% of the total steel volume used must be low-carbon," while for aluminium it read "at least 25% of the total aluminium volume used must be low-carbon and of Union origin." This introduces an origin rule requirement for aluminium that does not exist for steel.

The same distinction applied to public support schemes for construction, renovation, and vehicle purchases; aluminium had to meet both low-carbon and Union origin criteria, while steel only needed to meet the low-carbon threshold.

With the closure of the Mozal aluminium smelter in Mozambique and the introduction of costs arising from the EU's Carbon Border Adjustment Mechanism (CBAM) effective 1 January 2026, aluminium markets faced supply constraints. Secondary aluminium and billet market premiums had already begun reflecting these changes, alongside the import duty reverting from 4% to 6%.

Fastmarkets' weekly assessment for aluminium 6063 extrusion billet in Northern Germany (Ruhr region) was $540–570 per tonne on 13 February, compared with $490–530 per tonne on 2 January. Supply constraints in the primary aluminium market were expected in the coming months, and the IAA was also expected to put additional pressure on European producers to meet demand. Meanwhile, regarding green steel, the IAA was expected to help create demand for green steel through public procurement if implemented decisively.

Transaction volumes have slowed significantly in both flat and long products

Europe's green steel market continued to face pressure from low demand and shifting policy support. Transaction volumes in both flat and long products slowed significantly; buyers showed resistance to the current premiums for low-emission steel.

Industry participants continued to highlight insufficient end-product demand. While distributors and service centres showed limited interest, producers argued that stronger demand from end-users was essential for green steel to move beyond its current niche position. Reflecting the market stagnation, Fastmarkets' weekly assessment for domestic flat steel, differential to the crude steel index, Northern European delivery, remained unchanged at €100–150 per tonne ($119–178).