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
