Decarbonisation will widen future price spreads: Stahlmarkt-Consult

Germany’s biggest mills have unanimously set their course on a future of making iron and steel in a cleaner way using direct-reduced iron (DRI) and hydrogen. One consultant, however, warns against too much optimism in this regard, given that the fundamentals of such a transition are far from understood,” Kallanish learns from his blog.

“We must be cautious with defining a future price premiums for ‘green steel’,” Andreas Schneider of Stahlmarkt-Consult warns in his monthly blog. For one thing, the pace of reducing CO2 emissions, and the degree to which it is achieved, will differ widely among mills, Schneider points out. The span of prices/price premiums will open much wider than is the case today. “A definition of fixed price premiums should not come about before the conditions for the production of ‘green steel’ are defined,” he adds.

Plus, the steel itself needs a definition. “When is steel ‘green’?” Schneider asks provokingly. He observes that quite a variety of CO2-reduced steels are being promoted as “green.”

“The term ‘green steel’ covers a smorgasbord of technologies, interpretations and, unfortunately, also of promises that are not very reliable and more likely to serve marketing purposes,” Schneider states.

He points out that hydrogen itself is not necessarily the saving grace as it often sounds in the public discussion in Germany and the European Union. “Neither the use of direct reduction technology nor the use of hydrogen can be equated per se with being CO2-free,” he says.

Christian Koehl Germany