Europe's raw-materials market is entering a period of growing tension between weak industrial demand and rising concerns over supply security, according to analysis from Mining South East Europe. Construction, automotive manufacturing and traditional industry remain subdued, but strategic commodities such as copper, aluminium, lithium, graphite and rare earths are commanding increasingly important premiums. The result is a European minerals market in which prices are no longer determined by consumption alone.
Carbon costs, energy prices, trade restrictions, supply-chain concentration and Chinese export controls are becoming just as influential as underlying demand, the report notes. Steel provides the clearest illustration of this shift. EU apparent steel consumption is expected to increase by just 0.4% in 2026 to around 135 million tonnes, following several downward revisions to forecasts.
Despite this weak demand environment, steel prices have remained firmer than conventional market conditions would suggest, supported primarily by regulatory factors rather than cyclical demand. Northern European hot-rolled coil was trading at approximately 700 euros per tonne in May, while cold-rolled and coated products were around 830-850 euros per tonne. German delivered rebar stood at approximately 600 euros per tonne.
The Carbon Border Adjustment Mechanism (CBAM) has entered its definitive phase, while stricter EU steel safeguards are limiting import quotas. These measures could add roughly 50-80 euros per tonne to some flat-steel prices during the second half of 2026, the analysis indicates. On the base metals front, LME cash prices on July 17 stood at 13,373.50 US dollars per tonne for copper, 3,154 dollars for aluminium, 3,549 dollars for zinc, 16,725 dollars for nickel, 1,821 dollars for lead and 52,045 dollars for tin.
Copper has emerged as Europe's most important structural constraint. Demand is being driven by grid expansion, renewable energy, electric vehicles, data centres and defence electronics just as declining ore grades make new production increasingly difficult and expensive. The concentrate market has become particularly challenging, with annual treatment charges fallen to approximately zero and some spot terms turning negative.
This increases the strategic importance of European processors such as Aurubis, Boliden and KGHM. Poland has reduced the fiscal burden on copper mining by introducing investment-linked deductions that could provide KGHM with approximately PLN10 billion in relief over a decade. Zinc has emerged as one of 2026's strongest-performing base metals, supported by weak smelter production outside China and pushing prices to around 3,658 US dollars per tonne in early June.
Nickel presents a more complicated picture, with Indonesian production quotas temporarily pushing prices towards 20,000 US dollars per tonne before persistent inventories pulled prices back below 17,000 US dollars. Precious metals have entered volatile consolidation. Gold's London fixing was approximately 4,015 US dollars an ounce on July 20, below its early-2026 peak but still dramatically above historical levels.
Silver had briefly exceeded 100 US dollars an ounce in January before retreating towards the high 50s. Europe's critical and strategic raw materials sector is undergoing major structural changes. The EU's Critical Raw Materials Act targets domestic supply equivalent to 10% of extraction, 40% of processing and 25% of recycling requirements by 2030, while seeking to limit dependence on any single external country to 65%.
The first project selection includes 47 Strategic Projects inside the EU and 13 in partner countries. Lithium accounts for 22 of the projects, followed by nickel, graphite, cobalt and manganese. Germany's Vulcan Energy is seeking approximately 2 billion euros to produce 24,000 tonnes of lithium hydroxide annually through its Lionheart development, with production targeted for 2028.
Finland's approximately 500 million euros Keliber project, controlled by Sibanye-Stillwater, is designed to produce 15,000 tonnes per year of battery-grade lithium hydroxide. Other strategic mineral projects are progressing across northern Europe, including Sweden's Talga graphite project targeting approximately 19,500 tonnes per year of coated anode material. Serbia's Jadar lithium-borate project remains an important test of Europe's ambitions to establish more secure regional mineral supply chains.
Project designation does not automatically translate into investment, as projects continue to face appeals, local opposition, financing constraints and volatile commodity prices. Europe's battery-materials market is being pulled in two directions. European electric-vehicle sales increased strongly during the first five months of 2026, but battery investments remain under considerable financial pressure.
Lithium prices have recovered significantly from their 2025 lows, while cobalt has increased by approximately 130% following restrictions imposed by the Democratic Republic of Congo. Lithium-iron-phosphate batteries now account for approximately half of the automotive and energy-storage market, reducing the amount of cobalt and nickel required in future battery production. Some of the greatest risks are emerging in minerals consumed in relatively small quantities but with few practical substitutes.
China's controls affecting gallium, germanium, antimony, graphite, tungsten and heavy rare earths have created substantial regional price differences. European prices for gallium, dysprosium and terbium have at times reached approximately five times Chinese domestic prices, while germanium has approached three times the Chinese level. Tungsten has experienced an even sharper increase.
Nuclear minerals are attracting similar attention. Uranium entered 2026 at approximately 82 US dollars per pound, while long-term contracts have approached 100 US dollars. Urenco ended 2025 with an order book of approximately 21.3 billion euros.
Orano is investing 1.7 billion euros to expand the Georges Besse II enrichment facility in France by approximately 30%, supported by a 400 million euros European Investment Bank loan. Less visible industrial minerals are also experiencing significant disruption. Sulphur prices briefly surged from approximately 150-180 US dollars per tonne to as much as 1,000 US dollars following supply interruptions in the Middle East.
The consequences extend far beyond agriculture, as sulphuric acid is essential for phosphate fertiliser production, copper processing, nickel leaching and several battery-material supply chains. Cement consumption is being constrained by weak construction activity, but prices are still expected to increase by approximately 3-4% in 2026 as producers absorb higher carbon, energy and transport costs. Imports of clinker and cement from Turkey, Egypt and other neighbouring markets could face an additional 12-20 euros per tonne under CBAM.
Europe is unlikely to compete with the world's lowest-cost mining jurisdictions on extraction costs alone. Its more credible competitive advantages lie in low-carbon refining, recycling, traceability, specialised metallurgy and long-term offtake agreements. The central paradox is that weak industrial demand has not translated into uniformly cheap raw materials, according to the analysis.
Instead, supply security, carbon intensity, processing capacity and geographic origin are becoming components of commodity pricing.
Source: miningsee.eu