Total defense spending by EU states reached €418bn in 2025 (about $468bn), according to the European Defence Agency. Crude steel production fell to 125.8m tonnes, its lowest recorded level, says the industry association. Governments are asking arms manufacturers to expand while much of their industrial base struggles to remain profitable. This can be managed, but it requires some thought and care.
A construction-steel mill cannot simply switch to armor plate. Gun barrels require specialized metallurgy followed by advanced forging and machining. Naval components introduce different constraints, including the size of available equipment. ArcelorMittal’s specialist steel subsidiary Industeel uses vacuum treatment and controlled plate production for protection steels. Comparable chemistry alone does not make another supplier acceptable. Qualification takes time, and an idle furnace cannot clear a queue at a heat-treatment line.
Ukraine demonstrates how quickly an industrial network can unravel. Russia’s invasion deprived Metinvest, the Ukrainian mining and steel group, of its Mariupol steelworks and Avdiivka coke operations. Damage to power supplies can interrupt production far from the front. Protecting a furnace achieves little if its inputs cannot arrive or its output cannot reach customers. Civilian steel exports also finance continued operation, preserving capacity that defense orders alone cannot sustain.
Elsewhere, contraction is uneven. Worldsteel, the international industry association, recorded German output rising 6.3% in January–August, while EU production slipped 0.3%. Weak demand and expensive energy are meanwhile threatening investment. Military budgets buy much besides metal, so rearmament cannot replace the civilian market. Nor do national production figures establish that weapons programs are delayed by steel shortages. Under its €500m ammunition program, the European Commission directed roughly three-quarters of funding towards powder and explosives, demonstrating that other bottlenecks can be more immediate.
Specialist steel investment has its own awkward timetable. In May, Swedish steelmaker SSAB approved a 3.3bn krone ($310m) quenching line at Oxelösund. Its initial capacity of around 100,000 tonnes will serve advanced wear and protection steels, rather than armor alone. Production is planned for 2030. Even an established supplier responding to military demand needs years to deliver additional output.
Britain illustrates the value of rebuilding a narrow capability. By July, state-owned heavy engineering company Sheffield Forgemasters had delivered four development forgings for artillery barrels to Ukraine, the first UK-made barrels in almost two decades. Production stood at eight forgings monthly under a 150-barrel contract through defense manufacturer BAE Systems. Finishing and integration take place in Ukraine. Neither country supplies the complete capability.
Poland has acted on a similar vulnerability. In May, its Military Property Agency acquired 49.9% of Huta Częstochowa’s operating company. The defense ministry describes it as the country’s only steelworks capable of producing quenched heavy plate for defense. Securing ownership is clearly a critical sovereign consideration, but converting it into dependable military supply still requires output backed by durable orders.
These targeted expansions coexist with retrenchment. German steelmaker Thyssenkrupp’s 2025 restructuring agreement has reduced production to about 9m tonnes. That does not establish a corresponding loss of armor capacity, but this type of situation does require governments to examine which specialist skills disappear when larger operations shrink. Government support should require recipients to maintain or expand some military production capabilities, such as armor plate. Keeping ordinary steel mills open will not resolve a shortage of equipment needed to forge gun barrels.
Energy security depends on some of the same industrial capabilities. Transformers require specialized electrical steel, and the International Energy Agency reported in 2025 that large units could take up to four years to procure. Those delays reflect wider manufacturing constraints, not evidence that military orders are displacing grid investment.
The overlap is more direct in nuclear engineering. The aforementioned Sheffield Forgemasters says its £1.3bn defense-funded expansion will also strengthen civil nuclear capabilities. Competing orders could strain shared equipment, but investment can expand capacity for both sectors. Support should therefore protect energy-critical production alongside military supply. Losing a specialist supplier can obstruct electrification, while defense spending that sustains one can benefit civilian customers too.
China can apply pressure to European commercial viability without selling armor directly to NATO armies. The OECD records Chinese steel exports of over 131 million tonnes in 2025, up by nearly 14%. Cheap imports squeeze civilian sales that help finance specialist investment. Protecting domestic European mills can restore margins, but trade barriers also increase costs for downstream manufacturers.
Reuters reported in August that tighter EU quotas were creating another obstacle for Ukraine’s war-damaged steel industry. Restricting an ally’s market access can undermine the industrial resilience that defense policy seeks to strengthen.
Russian supply exposes a sharper contradiction. The EU imported 3.72 million tonnes of Russian semi-finished steel in 2025, worth €1.63bn, with Belgium and Italy as major destinations. This establishes an upstream dependency. Hopefully, this trade will end by September 2028, as the EU intends.
Over the next two years, governments need to establish which qualified suppliers could actually affect weapons deliveries. Prime contractors should disclose dependencies below their immediate subcontractors and reserve scarce production slots. Alternative suppliers must be qualified before disruption.
Through 2030, multi-year orders should make specialist expansion financeable. Beyond 2030, the problem returns to industrial competitiveness. Affordable electricity and timely grid connections determine whether new furnaces can operate economically. Electrification also requires suitable feedstock, with scrap quality particularly important for demanding grades.
Trade protection cannot substitute for those conditions, while defense orders cannot indefinitely sustain mills deprived of viable civilian customers. The transition must preserve specialist processing while replacement equipment comes online. Otherwise, subsidizing modernization could coincide with an avoidable interruption in military supply. Reliable civilian demand can help support the skilled workforce between defense contracts, reducing the cost of retaining surge capacity.
Europe can rearm with a smaller steel industry. But it faces a test of whether weapons manufacturers can still obtain approved components when demand surges, or suppliers fail.
Maciej Bukowski is the Head of the Energy and Resilience Program at the Casimir Pulaski Foundation in Warsaw and is a non-resident fellow with the Center for European Policy Analysis (CEPA), where he writes about issues including Central European security.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
