ArcelorMittal calls for internationally competitive prices for renewable energies, hydrogen
Steelmaker ArcelorMittal has called for guaranteed internationally competitive prices for renewable energies and hydrogen in sufficient quantities in the long term for Germany to successfully transition to carbon-neutral steel production.
The steelmaker May 17 called for a clear industrial policy, saying that the necessary economic policy framework needed to be put in place more quickly by Germany and the EU.
“Despite significant progress and an EU-approved funding commitment from the German government for the planned decarbonization projects at the flat steel sites in Bremen and Eisenhuttenstadt, the company is facing challenges, particularly due to high energy and hydrogen costs,” it said, adding that competitive energy prices were a significant factor in its final investment decision to decarbonize production in Germany.
ArcelorMittal said CO2-neutral pig iron production required a hydrogen price of around Eur2/kg to remain competitive, but hydrogen prices were Eur7-9/kg. It said it was also difficult to operate EAFs economically in the long term due to high electricity prices.
Platts, part of S&P Global Commodity Insights, assessed the cost of green hydrogen production via alkaline electrolysis in Germany, backed by renewable power purchase agreements, at Eur6.58/kg ($7.13/kg) on May 16, down from Eur7.77/kg a month before.
The assessment reflects one possible pathway for producing EU Renewable Energy Directive-compliant green hydrogen.
The recent debut auction under the EU’s European Hydrogen Bank, providing subsidy support for green hydrogen production, cleared at below 50 euro cent/kg, with seven projects totaling 1.5 GW in Iberia and the Nordics the winners.
The winning bids demonstrated both the competitive locations for green power production, along with a willingness of end users to pay a premium for the renewable hydrogen.
There were also several bids from projects in Germany for well under Eur1.50/kg, EC data showed.
Carbon neutral by 2050
ArcelorMittal aims to reduce its CO2 emissions in Europe by 35% by 2030 and reach carbon-neutral production globally by 2050.
In Germany, the company is converting its blast furnace technology to natural gas to reduce emissions and plans to eventually move to hydrogen-based direct reduction and electric arc furnaces.
In February, the German government announced Eur1.3 billion support ArcelorMittal’s plan to build EAFs in Bremen and Eisenhuttenstadt, as well as a direct reduction plant in Bremen.
The steelmaker said at the time the use of green hydrogen could result in savings of more than 6.3 million mt/year of CO2 by 2030 and produce 3.4 million mt of CO2-reduced steel in both plants.
“Decarbonizing our production is a top priority for us, but the current costs and future price forecasts for energy and hydrogen pose a considerable challenge,” ArcelorMittal Germany CEO of the flat steel plants in Bremen and Eisenhuttenstadt Thomas Bunger said in the statement.
“An industrial policy aimed at reducing these costs is crucial for our success and the success of the entire industry,” he said.
“We need the rapid expansion of renewable energies and the development of domestic hydrogen production while at the same time increasing hydrogen imports in order for the transformation to succeed,” ArcelorMittal Europe Vice President Lutz Bandusch said.
The steelmaker said establishing a “green lead market” was crucial to the viability of producing CO2-reduced steel competitively, while labeling initiatives could also be helpful to set additional incentives, such as in public tenders and government procurement.
ArcelorMittal also called for “decisive action” at national and EU levels against distortions of competition, which it said would include closing the remaining weaknesses in Carbon Border Adjustment Mechanism to reduce the risk of part of the industrial value chain migrating outside Europe.
“ArcelorMittal remains firmly committed to achieving CO2-neutral production worldwide by 2050. Active support through government measures is essential for the transition to a sustainable future,” it said.
ArcelorMittal produces CO2-reduced steel under its XCarb brand and subscribes to the ResponsibleSteel standard, which guarantees socially and environmentally responsible supply chains and production methods, it said.
Platts, part of S&P Global Commodity Insights, assessed domestic HRC prices in Northern Europe at Eur630/mt ex-works Ruhr May 16, down 8.7% since the start of 2024.
Authors: Jacqueline Holman, jacqueline.holman@spglobal.com, James Burgess, james.burgess@spglobal.com
Clean, lean US steel sector hunts for green steel premium
By global standards, US steel is already pretty green — and pretty pricey.
The American Iron and Steel Institute credits EAFs in its most recent industry profile with about 71% of US domestic steel production, compared with a 26% global average.
A round-up of estimated greenhouse gas emissions from the top four US steelmakers — Cleveland-Cliffs, Nucor, Steel Dynamics Inc and US Steel — from each company’s most recent sustainability report show a range of about 1.98 tonnes of carbon dioxide equivalent (CO2e) per 1 tonne of steel down to as low as 0.39 tonnes C02e per 1 tonne of steel, covering Scope 1 and 2 emissions, which are direct emissions generated by an entity or its subsidiaries and indirect emissions from energy used by an organization.
Scope 3 emissions are a little harder to pin down due varying definitions – most producers lump them in with raw material costs rather than assume the carbon emissions of heavy end-use emitters like automobiles.
Even there, however, at least one major producer – Steel Dynamics Inc – puts its Scope 1, 2 and 3 average emissions as low as 0.78 tonnes CO2e per 1 tonne of steel. The same sustainability report puts the global average around 1.91 tonnes CO2e per 1 tonne of steel, with the global blast furnace average at 2.33 C02e per 1 tonne of steel.
That cleanliness comes at a cost. Though environmental concerns are just one piece of the US price puzzle, they are partially reflected in the disparity between US, European and Asian prices.
Fastmarkets’ daily steel hot-rolled coil index, fob mill US Midwest was last calculated at $38.97 per cwt ($779.40 per short ton) on Wednesday May 15. This is against a backdrop of sideways-to-stagnant prices.
In contrast, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €641.83 per tonne ($632.91 per short ton) on Thursday May 16.
Likewise, Fastmarkets’ weekly price assessment for steel HRC import, cfr Vietnam was $550-555 per tonne ($498.95-508.02 per short ton) on May 10.
Fastmarkets currently publishes green steel differentials for these European and Asian HRC assessments. The European green differential works out to $147.92-246.53 per short ton, while the Asian differential works out to $185.07-308.44 per short ton.
In a simplistic and possibly coincidental view, the European HRC price subtracted from the US HRC price is roughly the value of the European green steel differential.
When all steel is green, none is
It’s tempting to say that buying US HRC in general is buying green steel, but the industry can’t be complacent if it wants to retain or grow that premium, according to Greenway Steel founder Randy Charles.
“US-produced steel does represent global leading low emissions — for now,” he told Fastmarkets. “That will change rapidly in the EU given the incentive behind the ETS [Emissions Trading System] and carbon liability, as well as investments being made in new H2 technology.”
Earlier this year, one steel mill executive told Fastmarkets that they wouldn’t be surprised if carbon emissions ultimately become another tool in the US’ protectionist toolbox, similar to the Carbon Border Adjustment Mechanism in place in the EU.
Such a move would have bipartisan appeal, regardless of the victor in the US presidential election in November, the executive said. It would echo the 232 national security restrictions originally put in place by President Donald Trump — and maintained by President Joe Biden — and it would mollify environmental advocates and industrial concerns alike, as the US already has a leg-up on the green steel front.
In that scenario, a prospective US green steel differential may actually go negative, as the carbon costs for higher-emission steel add up; it may be cheaper to buy green.
A second executive likened the push for green steel to the bounty some states place on mercury switches, a once-common and toxic component of older cars being sent to the scrapyard.
Some states paid a bounty per switch, incentivizing their removal. Some states still do. And some moved to a voluntary system that did away with bounties entirely, putting the cost of removal and reporting on the scrapyard.
A carbon tax on steel would harm incentives to go green in search of higher profit and make it just another cost of doing business — a boon to a burden in just a few years, he said.
Ultimately, green steel will come in two primary shades, worldwide, Charles said — relative and absolute.
“The absolute basis, and lowest footprint, will carry the highest premiums for end users wanting, or even needing, to decarbonize supply chains.”
Published by: Dan Hilliard
Dillinger, Sif team up to make monopiles fully circular low carbon
German steel producer Dillinger has signed an addendum to an existing deal with design engineering company Sif to supply its lower-emission heavy-plate steel for offshore wind foundations, the companies said May 16.
By signing the “green steel” addendum to the plate supply framework agreement, Dillinger and Sif said they have detailed the transition to supplying low carbon steel plates for Sif’s new and enhanced XXXL monopile factory, with the deal aiming to achieve full circularity of the monopiles.
“This agreement is key to decarbonizing materials such as steel. With this addendum and the MoU between Sif Decom and Dillinger, the partners support development of lower-emission steel manufacturing and circularity of materials used in offshore wind foundations,” Sif CEO Fred van Beers said.
“We are very proud of this future-focused collaboration with Sif,” Dillinger chair Stefan Rauber said. “Our steel plates from Dillinger, which in future will be produced with reduced CO2 emissions, are the basis for monopiles and wind farms where renewable energies are generated.”
Starting in 2027/2028, SHS and its subsidiaries Dillinger, Saarstahl and ROGESA plan to produce up to 3.5 million mt/year CO2-reduced steel under the PURE STEEL+ brand. By 2045, the entire production volume of the company’s crude steel is set to be carbon-neutral.
Many companies in different industries across the steel value chain are buying increasing volumes of low-carbon “green” steel to reduce their scope 2 and 3 emissions, closing offtake supply agreements to secure low-carbon raw materials.
Platts, part of S&P Global Commodity Insights, launched its carbon-accounted price assessments in May 2023, following the market trend of strengthening lower-carbon steel demand.
Platts assessed Northwest European hot-rolled carbon-accounted coil stable on the day at Eur765/mt ($832/mt) ex-works Ruhr on May 15.
The assessment was calculated in line with the sum of Platts daily carbon-accounted steel premium (CASP) assessment and Platts daily hot-rolled coil price assessment in Northwest Europe.
Annalisa Villa
UK HRC market sentiment bearish on low demand
Domestic prices for hot-rolled coil in the UK fell in the week ended May 16 as trading activity remained low and distributors started to offload ex-stock material at competitive prices.
Atlantic Steel Processing, a flat steel service center and stockholder, went into administration on May 14, according to official government data. Market sources said that this will result in significant tonnages going around and prices are expected to be lower in the coming weeks.
“Atlantic steel went into administration, so the cargo has to go somewhere,” a trader source said. “Spot prices are expected to be lower because of this for the next 2-3 weeks.”
Atlantic Steel typically has up to 10,000 mt of flat steel in the warehouse, and further 10,000 mt in ports, according to the company’s website.
Steelmakers have been struggling to fill order books as buyers were holding back from bookings. Sources also said that no significant improvement in demand is expected until next year.
“The market is still very quiet,” a service center source said. “EU mills are hungry for orders.”
Additionally, the bearish mood in the market was supported by competitive stocks of local distributors offering European hot-rolled coil at GBP580-600/mt ex-stock West Midlands.
For new EU-origin material, offers and tradable values were reported at GBP610-620/mt DDP West Midlands.
For material originating from Vietnam, offers were reported at GBP590-600/mt DDP West Midlands, while tradable values were reported at GBP580-585/mt DDP West Midlands.
For material originating from Turkey, offers and tradable values were reported at GBP590-610/mt DDP West Midlands.
Platts assessed UK HRC down GBP5/mt on the day at GBP605/mt basis DDP West Midlands May 16.
For the “other countries” UK HRC category, mainly including material from Asia, 89% of the total quota — which is 22,589 mt — has already been used, according to official UK government data.
Platts is part of S&P Global Commodity Insights.
H2 Green Steel explores four new ‘large’ projects
Swedish start-up H2 Green Steel is confident customers are willing to pay a premium for green steel and is expanding its project portfolio.
The company has four new large projects “close to moving into the permitting phase,” Kallanish learns from its vice president for growth and hydrogen business, Kajsa Ryttberg-Walgren. The pre-feasibility stage projects are located in Quebec, Texas, Brazil and Portugal, she reveals at the World Hydrogen Summit in Rotterdam.
H2 Green Steel has been searching for these “perfect locations” for two years, the executive adds, without elaborating on details. “They are like the gold mines of the future.”
Its pioneering project in Boden, Sweden, a greenfield steel mill, relies on a giga-scale electrolyser to bring 5 million tonnes of green steel to the market by 2030. With a €6.5 billion ($7.03 billion) financial closure, the project will produce 100,000t/year of green hydrogen, using 750 megawatts of renewable power. First production is expected in 2026.
This new steelmaking route can reduce emissions by 95%, decarbonising a sector that accounts for 8% of the global CO2 emissions, according to the International Energy Agency. But to cost-effectively replace coal with green hydrogen in steelmaking, a steel manufacturer would have to be in places with abundant renewables at a low cost.
“We should rethink the value chain. It doesn’t make sense to build a plant that is dependent on maybe 20 terawatt-hours of renewables in a location where you don’t have renewables,” argues Ryttberg-Walgren.
While recognising that hydrogen imports can be a decarbonisation enabler, she says there are “better ways” for the steel industry to get energy indirectly to Europe, such as through direct reduced iron (DRI) imports. “Instead of trying to protect everything that you have today, think about – how can I protect what should be protected for the future? It’s a very political topic,” she adds.
Ryttberg-Walgren notes that if Europe is to meet the Paris agreement target, a lot of “political courage” will be required.
Plans to use green hydrogen to export decarbonised iron to Europe and elsewhere are high on the agenda of countries such as Namibia, South Africa and Brazil.
Voestalpine, Mercedes-Benz, TSR ensure green steel for automotive
Austria’s largest steelmaker, voestalpine, together with Mercedes-Benz and TSR Recycling, will form a joint project to ensure the technical feasibility of processng post-consumer scrap (old scrap) into high-quality scrap that can be used to produce high-quality steel grades for the automotive industry, Kallanish notes.
In this way, the steelmaker is making an important contribution to sustainability and at the same time evaluating new opportunities for its increasing demand for scrap in connection with the transformation to green steel production, the enterprise claims.
“The increasing demand for recycled materials due to the European steel industry’s switch to green steel production cannot be fully covered by new scrap and it will therefore be necessary in future to increasingly utilise old scrap,” voestalpine states. “In this specific joint flagship project of voestalpine, Mercedes-Benz, and TSR, the less pure post-consumer scrap is being reprocessed so that it can be used as high-quality steel of the highest grade as a side panel in the Mercedes A-Class sedan.”
“Voestalpine has been working successfully for decades on closing loops in production in order to conserve resources and secure the supply of raw materials,” says the company’s chief executive, Herbert Eibensteiner. “This unique cooperation with Mercedes-Benz and TSR Recycling shows us further opportunities and potential in the circular economy and is another important puzzle piece on the road to green steel production.”
“Being able to produce high-quality steel grades using low-emission production processes is one of the major technological challenges in the transition to green steel production,” notes Hubert Zajicek, head of voestalpine’s steel division. “We are conducting intensive research on various processes and are developing solutions together with our customers and suppliers so that we can continue to expand our leading position in the production of high-quality steel grades despite the change in technology.”
In accordance with its greentec steel plan, voestalpine is replacing two blast furnaces, one in Linz and one in Donawitz, with an electric arc furnace (EAF) starting in 2027. Depending on the quality requirements, a mix of liquid pig iron, briquetted sponge iron (hot briquetted iron, HBI) and scrap will be used in the two EAFs.
“Scrap is therefore a valuable raw material and plays a key role in transitioning to green steel production,” it adds.
Svetoslav Abrossimov Bulgaria
Margins remain under pressure downstream: Assofermet
Italian service centres are “caught in the grip between producers and consumers, in a market characterised by uncertainty,” bemoans steel trade association Assofermet in its market note sent to Kallanish. They continue to operate despite, according to them, insufficient margins.
The recent increase in quotes from EU and non-EU steelmakers is compounding supply restrictions stemming from EU safeguard measures and pushing distributors and re-rollers to increase their May prices.
April was a slow month in terms of volumes sold, also due to the several bank holidays observed in Italy and Central European countries. Some positive signs however came from end-users. Fearing a price rebound for coils, they increased their sheet and strip purchasing volumes, stocking up for May.
“Even though the conflicts in Ukraine and the Middle East are bound to still impact world economies, some signs of optimism are coming from the EU for the long-awaited … round of lowering the cost of money [interest rates], which is expected to finally begin in June,” Assofermet states. It adds that service centres’ raw material stocks are slightly above average due to the slowdown in first-quarter sales.
After the April weakness in the downstream sector, the association sees a price rebound shaping up in May for both flat and long products, with volumes in line with 2023. It states that the market no longer expects prices to decline but doubts the price increases will turn into a real recovery.
Natalia Capra France
Executives doubt EU stainless market recovery: BIR
A recovery in the European stainless steel market is yet to come. Some analysts forecast a two-digit on-year increase in stainless steel apparent consumption this year, says Bureau of International Recycling (BIR) Stainless Steel & Special Alloys Committee chairman Joost van Kleef, of Oryx Stainless in the Netherlands.
“This year started stronger than expected, supported by a further seasonal uptick in stainless steel demand as well as historically low imports and import penetration levels. European crude stainless production, however, has been impacted by strikes, with one of the larger producers even being affected since February. Despite this, overall mill demand for stainless scrap was robust during the first quarter,” van Kleef states in the latest BIR mirror sent to Kallanish.
European scrap availability was tight in Q1. In January-February, the EU recorded an increase of more than 50% in net imports of stainless scrap from third countries when compared to the same period in 2023.
European stainless coil supply reduced considerably in Q1 owing to strikes that have halved finished flat products output, says Ruggero Ricco, chief executive of Italy’s Nichel Leghe. While Outokumpu stopped production for a few weeks, Spain’s Acerinox continues to face worker disputes. This has enabled Aperam and Acciai Speciali Terni (AST) to achieve full order books for the coming months.
“It is not possible to say with certainty whether scrap and coil price increases can continue once all four producers return to normal,” Ricco states. He adds that in June and July, the European market may be flooded by imported finished product from Asia.
There has been a slight uptick so far in Q2 of scrap and coil prices. However, despite scrap sellers’ push for increases, driven by shortages and the recent LME nickel hikes, the value of scrap has not risen by as much as it should have. This is also because of the weakness in long steelmakers’ sales and continuous use of nickel pig iron, Ricco concludes.
Scrap prices for grade 304 and 316 are ticking up in Italy this month but flattening in other EU countries such as France. Demand from long steelmakers in Europe remains weak, a northern European long producer confirms. 304 grade is being sold at between €1,440-1,490/tonne ($1,554-1,608) delivered depending on each EU country, Kallanish notes.
Natalia Capra France
Biden administration confirms China 25% steel tariff
The Biden administration confirms it will increase the tariff rate on certain China-origin steel and aluminium products under Section 301 from 0-7.5% to 25% in 2024. This follows an in-depth review by the United States Trade Representative.
The move is part of tariff action against multiple Chinese products, designed to encourage China to “eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation”, a White House statement says.
Besides steel and aluminium, the tariff rate on Chinese semiconductors will increase to 50% by 2025, on electric vehicles under Section 301 to 100% in 2024, on lithium-ion EV batteries to 25% in 2024, and on solar cells (whether or not assembled into modules) to 50% from 2024. Ship-to-shore cranes and medical products are also impacted.
“China’s forced technology transfers and intellectual property theft have contributed to its control of 70, 80, and even 90% of global production for the critical inputs necessary for our technologies, infrastructure, energy, and health care – creating unacceptable risks to America’s supply chains and economic security,” notes the White House statement seen by Kallanish.
“Furthermore, these same non-market policies and practices contribute to China’s growing overcapacity and export surges that threaten to significantly harm American workers, businesses, and communities,” it adds.
“We will continue to work with our partners around the world to strengthen cooperation to address shared concerns about China’s unfair practices – rather than undermining our alliances or applying indiscriminate 10% tariffs that raise prices on all imports from all countries, regardless whether they are engaged in unfair trade,” the note concludes.
Some of the impetus to review trade agreements with China came from Chinese customs data that showed a 30.7% year-on-year increase in steel exports during the first quarter.
The review has received support from US steel industry leaders. Last month, American Iron and Steel Institute president Kevin Dempsey said that while direct Chinese steel shipments have not grown to the US to this extent, Chinese steel exports to third country markets are often further processed into downstream manufactured products that are supplied to the US.
Assofermet Steel Market Note – May 2024
Carbon Flat Steel Service Centers
April was subdued in terms of volumes sold, even though there was greater buying interest from a number of specific buyers.
Although the period was characterized by a slowdown in business due to many holidays in Italy and central European countries, some positive signs came from those very end users who, driven by the rebound in coil purchase quotations, decided to cautiously cover their sheet and strip needs for the coming months.
Service centers were caught in the stranglehold between producers and consumers, in a market characterized by uncertainty. They have continued to operate under declared insufficient operating margins.
The recent increases in purchase quotations, confirmed by both EU and non-EU mills, added to the import limits imposed by the Safeguard Measure, erga omnes duties and the effects of the CBAM, are pushing distribution and pre-processing operators to change pace by following and reinforcing the upward path of their sales quotations, already undertaken in this first decade of May.
Raw material stocks, available at service centers, appear to be slightly above average due to the slowdown in sales estimated at about 10 percent in the first quarter.
The overall situation may not be a problem today since, as mentioned, quotations appear to be on the rise.
Even tough the conflicts in Ukraine and the Middle East are bound to still impact world economies, some signs of optimism are coming from the EU for the long-awaited and announced round of lowering the cost of money, which is expected to finally begin in June.
Stainless Flat Steel Service Centers
April saw improving demand accompanied by low supply caused by strikes at two major European producers in Finland and Spain and limited imports. The strike at the Spanish producer is still ongoing and has now lasted for more than three months.
The month of May opened with lower demand and new demands for increases from producers.
The EU commission, after a nine-month long investigation, has also just published the anti-circumvention regulation regarding cold-rolled imports from Taiwan, Turkey and Vietnam, confirming the exemption of major producers in these countries.
The decision is welcomed and will make the market better balanced, guaranteeing room for imports by producers while blocking duty-evading operations.
Steel Warehouses
In April weakness remains in the downstream market, that does not seem to want to restart on last year’s volumes. Prices, for which the reversal point was supposed to have been reached, also show no signs of recovery.
Both the flats and the longs, while without any collapse or exceptional movement, left a few cents on the ground throughout April.
The much heralded rebound, however, seems to have taken shape in the first days of May, with volumes in line with 2023 and with noteworthy increases on the price side, both in the flat world and, finally, in the long world.
Whether the premises, will solidify into a real recovery will depend, as usual, on numerous endogenous and exogenous factors.
The ECB seems ready to cut the official discount rate next month, but rumors no longer speak of a downward ride, as was feared at the end of last year, and it is likely that the May rebounds are already the result of the announcement of the June reduction.
Of course, the unfolding of the war in Ukraine, the outcome of which seems increasingly uncertain as time goes on, is certainly not helping markets to enter a phase of stability that would do so much good for the macroeconomic situation.
Flat Tinplate Steel Service Centers
Discreet turmoil on demand for ready material, both due to elongations in lead-times of European ironworks reported up to 14 weeks (as opposed to the usual 7-8), and a price increase of several tens of euros, indicating the expected reaching of the bottom. On the import side, a recovery in quotations is also denoted, supported by the further increase in logistics costs.
May 2024 Steel Market Note – Assofermet