Category: Latest Updates

The spread between green steel premiums accepted by spot buyers compared to projects and end-users remains wide, sources told McCloskey during Tube & Wire Trade Fair in Dusseldorf, 13-17 April.

Multiple sources reported increasing demand from the construction industry, as it is easier to find steel with lower CO2 content compared to other construction materials, allowing decarbonization targets to be met. The situation is similar in the automotive segment, which remains at the forefront of green steel consumption, as steel is one of the materials used in car production which can allow easier decarbonization, compared to other components such as plastic.

For both the construction and automotive sectors, the achieved premiums for green hot-rolled coil (HRC) from both greenfield projects, upcoming equipment installations and existing electric-arc furnaces (EAFs) have been reported at EUR160–200/t, or even higher in some cases.

Some sources also said that steel mills which had previously accepted premiums of around EUR100/t from end-users, have now increased them to around EUR200/t.

One steelmaker noted that the premiums also depend on the final buyer and specification of the products, but they confirmed the prices.

In both cases, green steel premiums are easier to absorb in the total costs of production. Distributors, in the meantime, continue to avoid purchases of low-CO2 steel due to higher exposure to additional costs, unless they are trading back-to-back with an end user.

As a result, the premiums spot buyers were willing to accept fluctuated between EUR60/t and EUR100/t.

Green steel demand

Demand for green steel is expected to grow, although at a relatively slow rate in the short to medium term. The European market first needs to adjust to traditional steel market changes, such as the Carbon Border Adjustment Mechanism (CBAM), introduced in January this year and an anticipated reduction in tariff-free import quotas from 1 July. Both policies bear uncertainties as the exporter will be able to account for their emissions in the steel custom cleared in the EU this year only in 2027, exposing buyers to the risks of paying higher duties based on default values. And while the EU authorities have confirmed the new quotas per product, some critical details such as the country-specific volumes and melt-and-pour clause have not yet been disclosed.

But the green steel consumption outlook remains positive in the longer-term, according to multiple market participants.

The recent proposal to adjust carbon-neutral targets for the automotive industry is expected to contribute to a rise in green steel consumption. In late 2025, the European Commission proposed to relax the rule which originally required all cars sold from 2035 to have zero carbon footprint, effectively mandating a shift to electric vehicles. The recent changes allow some combustion-engine vehicle production to continue if their remaining emissions are offset through measures such as green steel use.

Some steelmakers also suggested that geopolitical tensions in the Middle East, which triggered significant fluctuations in energy prices as well as oil and gas supply disruptions, will push the sector towards renewable energy to reduce dependence on fossil fuels. Both wind power plants and solar panels require steel, and those projects usually try to use steel with lower CO2 content.

Demand for renewable energy is also expected to grow due to a large number of decarbonization steelmaking projects in the EU. More information on decarbonization projects in the Europe and global steel sector can be found in McCloskey’s Global Green Steel Profile.

Stegra financing welcomed

Green steel startup Stegra announced a new EUR1.4 billion financing round on 14 April, enabling it complete construction of an integrated steel mill in Boden, Sweden.

The news was positively received by other steelmakers, particularly those building greenfield operations. The Boden plant is the first new steel mill constructed in Europe in 50 years, and the success of this startup directly impacts the willingness of investors to finance other new projects in the EU.

“In round 12-18 months from now, we will see both green steel and green iron coming out of the facility in Boden,” according to a statement from the company’s CEO, Henrik Henriksson, during the Tube & Wire fair.

Stegra plans to start running the mill on 100% ferrous scrap feedstock before adding direct-reduced iron (DRI). The scrap-DRI mix will be roughly 50/50 but will depend on the finished steel specifications and costs. Henriksson said that ferrous scrap prices in Europe will continue to rise as more EAFs are built in the regions to decarbonise and scrap availability could be limited.

Iron ore for DRI production will come from Brazil, Canada and northern Sweden.

Around 40% of Stegra’s contracts are signed with buyers from the automotive segments, but construction and white goods industries have also contributed to the sales.

In order for steel to be approved for use in car making it requires certifications of quality and some production history, which is likely to prevent immediate steel shipments from the new plant to automotive customers. Stegra, however, said it has foreseen those challenges and confirmed that the quality verification could take between 18 and 24 months. Until those are obtained, the steelmaker will provide non-prime steel to the market.

“We have found different ways of coming out to the market, one of them is partnership with Thyssenkrupp Materials,” Henriksson said.

Earlier this year Stegra signed an agreement with Thyssenkrupp’s service centre division, Materials Processing Europe. Under the multi-year agreement Thyssenkrupp Materials Processing Europe will acquire significant amounts of non-prime steel from Stegra to supply its customers in various industries across Europe. The material supplied to Thyssenkrupp will not be recognized as low-CO2 and Stegra will sell the green value as Environmental Attribute Certificates (EACs) to other customers in the prime steel market.

“We expect that there will be cooperation with some of our customers and we will honour other companies’ qualification as well. So if a supplier can qualify a batch of products [for automotive use], and we have similar products then we can exchange volume because we can trust the channel and also, this will allow to cut lead times [for green steel] for the first-tier suppliers in the automotive industry.”

Other market sources confirmed that such approach could facilitate sales to carmakers.

Green steel premiums to recede

According to estimates from multiple market sources, traditional steel prices will exceed those for green steel products in a few years. This will happen due to rising emissions costs as the number of free CO2 emission allowances will gradually decrease and steel mills, particularly those operating more carbon-intensive blast furnaces (BFs) will face higher costs.

“I think green steel premiums is a temporary thing. Traditional steel prices will rise as the number of free emission allowances are decreasing and soon the low-CO2 projects will have a cost advantage,” a steelmaker said.

Author: Maria Tanatar

opisnet.com

Debate surrounding the European Commission’s proposal to extend the scope of the EU’s Carbon Border Adjustment Mechanism (CBAM) to downstream sectors is heating up, as European machining and equipment manufacturing association VDMA calls for the complete abolition of the carbon leakage instrument.

Outlining the “insurmountable bureaucratic challenges” CBAM presents for European industrial SMEs, the VDMA highlights a yearly labour decline of 2.6% in the German plant and engineering industry in evidencing the sectors’ woes, attributing the losses to difficult business conditions as a result of EU overregulation and Chinese import pressure.

As such, across various press releases and a media op-ed, the VDMA calls for the “entire CBAM mechanism to be abolished or at least fundamentally revised,” further arguing that “the plans to extend [CBAM] to additional industrially processed products must be stopped.”

Citing a recent members survey, the association states that “76% of machinery and plant engineering companies receive reliable emissions data from less than 10% of third country suppliers. As a result, companies are forced to use [default values] for over 90% of their CBAM declarations.”

“Collecting verified, product specific emissions data for these inputs has proven extremely difficult in practice and sometimes impossible,” it said. “Suppliers often lack the technical capacity, data infrastructure or regulatory incentives to provide emissions data in line with EU requirements.”

The industry body claims that as a result of anticipated verification frictions and the consequent use of default values, the machinery sector will have to purchase up to 30% more CBAM certificates than other sectors “where access to emissions data is easier,” opening European manufacturing to inflationary cost risk and substitutive import pressures beyond what industry can absorb. According to the VDMA, “the limits of tolerance have been reached” – 40% of its survey respondents are reportedly considering relocating operations out of the EU due to CBAM, with over a third expecting to suffer labour cuts.

CBAM entered its definitive stage in January, imposing carbon costs on in-scope imports in line with what the relevant producer would owe if operating under the EU’s Emissions Trading System (ETS). This is to prevent “carbon leakage” – the relocation of the EU’s domestic industry to foreign jurisdictions with less burdensome climate costs – and as such targets energy-intensive industries, like the steel sector, in balancing operating costs (and market price) between domestic and international producers.

However, the consumers of these energy-intensive goods remain relatively unprotected – be it via trade or climate protections – from substitutive imports of finished components. There is therefore growing concern among industrial players that downstream manufacturing sectors consuming CBAM goods could face potentially existential price inflation in their supply chains, further undermining downstream competitiveness in both their domestic and international markets.

Anticipating this risk of deflecting carbon leakage downstream, the European Commission proposed to extend the scope of CBAM to downstream goods in December, with 180 CN codes selected for extension on the basis of statistical modelling of carbon leakage risks. Contrary to the VDMA’s position, many in the steel supply chain have criticised the proposed scope as insufficient (including representatives from non-included downstream sectors), and seek a broader application, either via modelling adjustments or qualitative CN code inclusions.

But CBAM is not the only factor behind fears of unmanageable upstream price inflation; the EU’s long-term replacement of its steel safeguard system – expected to be implemented for July when current protections lapse – commits to approximately halving duty-free steel import volumes, and introduces a doubling of the tariff rate to 50%, a level most importers are completely unable to accommodate on their books if forced to pay out-of-quota duties.

Upstream steel prices thus look poised to increase further as regulatory restrictions bite international supply to the EU. McCloskey’s research team forecasts higher European steel prices later this year despite a fragile demand outlook, expecting higher costs to impact “both industrial steel end-users and final consumers.”

Sounding the alarm, European steel trade and distribution association EUROMETAL last week spearheaded a campaign – now exceeding 400 signatories across the EU’s steel supply chain – calling on European authorities to immediately extend the scope of tariff-rate quota and CBAM instruments to downstream steel-consuming products (exhaustively, across CN headings 73-95) as an urgent priority, preferring a remedy of “Trumpish” pace to the EU’s traditional bureaucracy.

European steelmakers association EUROFER is also understood to be operating behind the scenes,  mapping steel and steel derivative CN codes as a baseline from which to support a swift downstream extension of the EU’s new steel trade protection framework.

Last week, automotive sources told McCloskey that any effective extension of trade or climate protections to downstream goods would have to be “exhaustive” and “intense,” as substitutive component imports can already access the EU at ultra-competitive margins of 30% or higher, rife with circumvention loopholes.

The VDMA’s policy preferences would instead see CBAM “abolished as a failed instrument,” but accepting the unlikelihood of a total withdrawal, the association instead calls for: an “immediate halt” to downstream extensions; a “robust” export solution; “realistic,” non-punitive default values; and “a significant reduction” to administrative burdens on European operators.

The latest Rapporteur draft reports – produced to guide compromises during the EU’s trilogue legislative negotiations between the European Parliament, the EU Council and the European Commission – on both the CBAM downstream extension and Temporary Decarbonisation Fund (TDF) proposals would seem to address at least some of the VDMA’s demands, suggesting to extend TDF grants for access by downstream operators, and to link issued funds more directly to export productions. Downstream CBAM goods would also have punitive mark-ups removed when using default values due to mitigate the complexity of downstream supply chains, but given the scale of some steel default values on a per ton basis, it is unlikely that the removal of a 10-30% mark-up would do much to alleviate the VDMA’s concerns.

Author: Benjamin Steven

opisnet.com

The European Commission has initiated an expiry review of anti-dumping measures on imports of certain welded tubes and pipes from Belarus, China and Russia, Kallanish notes from the Official Journal on 17 April.

The probe follows a complaint lodged by the European Steel Tube Association on 16 January, which argued that allowing the measures to lapse would likely result in a recurrence of dumping and injury to the EU industry.

The product under review covers welded tubes and pipes of iron or non-alloy steel, of circular cross-section and with an external diameter not exceeding 168.3 mm, excluding line pipe for oil or gas pipelines, casing and tubing used in drilling, precision tubes, and tubes and pipes with attached fittings for use in civil aircraft. The products currently fall under CN codes ex 7306 30 41, ex 7306 30 49, ex 7306 30 72 and ex 7306 30 77, with corresponding TARIC codes 7306 30 41 20, 7306 30 49 20, 7306 30 72 80 and 7306 30 77 80.

The investigation will assess whether dumping and injury would continue or recur if the measures expire. The review investigation period covers 2025, while injury trends will be examined from 2022 onwards. The probe is expected to conclude within 12-15 months.

Corinth Pipeworks has strengthened its long-standing collaboration with ArcelorMittal in a shared commitment to sustainable steel solutions for the evolving energy sector, Kallanish hears from ArcelorMittal.

Corinth will now also be using XCarb, ArcelorMittal’s low carbon-emissions steel, in its production of energy pipe, the companies announced at the Wire + Tube Fair in Düsseldorf last week.

The collaboration reflects the joint ambition of both companies to contribute to the energy transition by enabling the development of resilient, low-carbon infrastructure.

According to ArcelorMittal, the partnership supports the delivery of pipeline solutions with a significantly reduced environmental footprint, suitable for both conventional and emerging energy applications, including hydrogen transportation.

XCarb is a low carbon-emissions steel made in an electric arc furnace with minimum 75% scrap content and with 100% renewable electricity. The production process reduces CO2 emissions by 65% compared with the traditional steelmaking route in a blast furnace, ArcelorMittal states.

“By integrating low carbon-emissions steel solutions into our production processes, we actively support our customers in building next-generation energy networks,” says Ilias Bekiros, general manager of Corinth Pipeworks.

The European Commission has amended anti-dumping measures on Chinese tinplate imports, granting new exporting producer status to Linqing Hengtai Metal Materials.

The company will now face a 24.6% duty, in line with cooperating non-sampled exporters, after proving it did not export during the original investigation period, is not linked to existing exporters, and began shipments to the EU only after the probe began.

Existing duties on Chinese tinplate range from 13.1% to 46.8% for sampled firms and 62.3% for non-cooperating exporters, Kallanish notes.

Northwestern European mills are gearing up for another rebar price hike but have yet to announce it. Unlike most Italian rebar makers, the northwestern mills are still withholding announcements, using last week’s Wire + Tube trade fair in Düsseldorf as orientation for the next step, observers say.

“My last base price offer was still €400/tonne [$473] from March,” says a Dutch manager who plans to buy several thousand tonnes and held various talks at the fair. He and others expect an upward move by €30-40 going forward, but mills have so far not been clear. “They told me they’d need some more time; it’s a difference if you hear it [offer] in a chat, or get it on paper,” he tells Kallanish.

The market is currently suspended between rising production costs for mills and a sustained reluctance in downstream manufacturing and construction industries to decide on investment. The situation has worsened with the start of the war in Iran.

A couple of German sources still believe in the €400/t quote, simply because they have not heard different yet, as mills remain silent. But others dismiss that, seeing €430/t as the next realistic step; some even suggest that offers could reach €450/t.

One Austrian participant considers €450 to be too high, but is also preparing for €430-440. “I expect mills to come out clearly this week after the Wire fair,” he says. It would be unusual for northern mills to stay below Italian offers, which at the same price figure are effectively higher, as they quote ex-works, while the northern offers are quoted delivered.

One Austrian mill is seen offering halfway, with its latest offer of €420. However, that mill has since last year quoted an exceptional size extra for standard gauge 12mm, moved from €265 up to €280. Therefore, its final delivered price of €700 is already at the mark targeted from south to north.

More deals for domestic hot-rolled coil (HRC) in Northwest Europe were settled at lower prices in the week to 17 April as some steelmakers need to fill their production lines. 

Contrary to earlier market expectations that European mills would increase offers during the Dusseldorf Tube & Wire trade fair held on 13-17 April, target prices have not changed, and some mills continued to give discounts. Other steelmakers, however, are understood to be mulling raising offers by around EUR20/t next week.

Target prices for domestic HRC remained at EUR720-750/t delivered across the EU.

In Northwest Europe, deals have been settled at EUR680-700/t ex-works, with higher number of transactions heard closer to the upper end of the range.

A major steelmaker concluded a deal for 40,000 tonnes of June shipment HRC at EUR685/t delivered to a big buyer in Northwest Europe. This price is the equivalent of around EUR660/t ex-works, according to market sources. Such prices, however, were not available for smaller lots.

Market sources cited lack of demand recovery and the restart of blast furnaces (BFs) in France in Poland as a reason for some price softening.

The geopolitical situation in the Middle East also contributed to concerns regarding demand development. Notably, regarding rising prices and scarcity of plastic car components caused by oil shipment interruptions, as well as disruption of aluminium supply are harming steel demand from automotive industry.

Despite the demand fears majority of the market participants do not view recent deals as a drastic change of trend and they expect prices to remain stable or even pickup in the second half of the year. The reduction of quotas coming into force from 1 July could drive domestic prices higher, sources said.

“There is lack of clarity in the market, so every minor change is used an excuse for pessimism, but this will change as soon as we see the new quota system. Demand is normal, it is not improving, but we also do not know what quota distribution will be between the countries,” a trader said.

The European Council presidency and the European Parliament have reached a provisional agreement on a new regulation aimed at tackling the negative effects of global overcapacity on the EU steel market, the European Commission announced in a press release 13 April.

The EU authorities have not disclosed a full proposal of the new measures, including the country-specific quotas, details on melt-and-poured clause, unused quota carryover, etc.

In Italy, where the market is more dependent on access to imports, domestic prices have remained unchanged at around EUR700/t ex-works.

Green steel market

While activity in the spot green steel market remained muted as buyers focused on dealing with the changes in the traditional steel market, higher demand was reported from construction projects.

Spot market premiums have been heard at EUR80-100/t, reaching around EUR160/t for projects or deals with end users.

Offered premiums were reported at around EUR200/t from both existing installations and projects currently under construction.

Author: Benjamin Steven and Maria Tanatar

opisnet.com

McCloskey was on the ground with steel industry participants at the Tube and Wire Trade Fair in Dusseldorf, April 13-17, navigating the climate of uncertainty currently plaguing the European steel market.

The rules of the European steel market are being actively re-written – from the incoming intensification of the EU’s steel trade quotas (half the volume, double the duty), and the definitive stage of the Carbon Border Adjustment Mechanism (CBAM), to new lead-market stimulus for low-carbon steel products – European authorities have been playing something of a ‘catch-up’ game over the last year in proposing legislative remedies to Europe’s longstanding industrial competitiveness problem, with the steel sector a primary focus.

For some market participants, this influx of new rulemaking threatens to paralyze their trade flows, overwhelmed by cost risks on embedded carbon from CBAM – or fears that import material could be subject to doubled duties of 50% from 1 July, administered under country-specific quotas that still remain unclear. Many importers tell McCloskey that they have had to reduce or even completely cease importing activities in recent months, unable to find any worthwhile competitive advantage under current cost risks.

While CBAM costs have been a primary driver for the bullish trend in EU steel pricing since the start of this year, carbon cost risks are increasingly accepted by McCloskey’s market sources, especially due to the lack of control importers actually have in minimising their CBAM costs versus their suppliers.

Exporters attending the Tube and Wire fair were reasonably confident in their capacity to successfully verify their emissions data to facilitate CBAM declarations and payments on ‘actual’ emissions values, seeing the EU’s upcoming quota revision as a greater burden. After all, what is the point in preparing to meet the EU’s carbon compliance obligations if international material is unable to access the bloc’s single market regardless?

Indeed, McCloskey spoke to multiple exporters – particularly in Turkey – planning to sue European authorities for CBAM and safeguard cost uncertainties, perceiving quantifiable harm from punitive CBAM default values, CBAM verification uncertainties, and an anticipated lack of balance in quota restrictions per country under the upcoming replacement safeguard regime.

Trading sources told McCloskey that exporters were attempting to assess the practicality of selling to the EU under the new duty regime via strategies such as export licensing, but that without a detailed break-down of country-specific quotas – currently being prepared by the European Commission as an Implementing Act to the overcapacity framework proposal – the import of steel remains mostly unworkable where customs clearance cannot be guaranteed before July, risking the 50% out-of-quota duty rate.

While the European steel value chain is relatively unanimous in stressing the necessity of shielding EU industry from non-competitive pressures to at least some degree, red flags are becoming increasingly visible from downstream industries in warning of their inability to absorb the inflationary impact of limiting trade or climate protections to upstream products.

As such, steel trade and distribution association EUROMETAL held a press conference during the Tube and Wire fair, spearheading a new campaign calling on European authorities to extend upstream steel trade and climate protections – namely the replacement safeguards and CBAM – to downstream steel-containing derivative goods. Emphasising the urgency of derivatives protection – and supported by almost 400 signatories from across the EU’s steel value chain – EUROMETAL called for a ‘fix first, ask questions later’ approach to downstream steel protection, drawing comparisons with the agility and scope of the section 232 tariff framework in the US.

Steelmakers are supporting this push to extend trade and climate protections to derivatives, reportedly working behind the scenes at the association level to properly map the EU’s steel consumption by CN code, operating under the general assumption that they will actually need a surviving market to sell their steel to, in the longer-term.

From McCloskey’s conversations with downstream operators, such as in the automotive sector, any downstream extension would need to be exhaustive in scope, and at a significant tariff rate, as substitutive steel-containing derivative imports from China, for example, can already enter the EU at an ultra-competitive margin of around 30%.

Amid these almost impenetrable import uncertainties, one would expect steelmakers to have the run-of-the-fair in Dusseldorf, able to realise pre-fair HRC offer prices of EUR750/t delivered in deals. However, McCloskey in fact traced a decline in steel trading prices through the Tube and Wire fair, generally trading below EUR700/t ex-works, with a large volume deal agreed at the outset of the fair at 685/t effective delivered Germany (EUR660/t base ex-works) for June.

Steelmakers therefore appear willing to give discounts to fill orderbooks for the second quarter, preferring to fill rolling lines than maintain the strongest of price signals. It will be interesting to monitor steel pricing dynamics going forward as the steel market – and import lead times – approach 1 July, with domestic steelmaker pricing power constrained only by what downstream consumers can accept.

Author: Benjamin Steven and Maria Tanatar

opisnet.com