EUROMETAL Nordics: Decarbonisation of EU steel industry at full speed, market struggles to keep up

Three key topics were discussed during the Nordics conference held by Eurometal in Oslo on June 3-4: decarbonisation of the steel industry; demand for green steel; CBAM regulation.


Green steel and decarbonisation

The supply and demand for green steel in the European market were widely discussed in Oslo. Steel mills at the conference expressed confidence in the future growth of green steel demand, despite current interest being limited to certain industries. According to SSAB’s Matts Nilsson, this demand is mainly driven by EU-imposed legislation. “Buyers never want to pay more, so mills have to always calculate the value for the customers. If they cannot generate the value towards their customers it’s impossible for the mills to charge a high premium price. It has to be a win-win situation and so far buyers have quite high targets put on them and this is more of a compliance for them to fulfill that,” Nilsson said during the panel discussion.

However, buyers’ attitudes are gradually changing, with the market becoming more receptive, according to Sarah Milne from H2GS. “We have five to seven year long legally binding agreements, they are not framework agreements, and they have got pricing in them, they have got supply in them. Our customers are willing to pay, we pre-sold half of our volume [2.5 million tpy]. There is a lot of first move advantage, there is a lot of OEMs wanting to be first. Automotive also wants to be first, and now we see construction companies coming through. We are also having conversations with Tiers, service centers,” Milne said.

To properly function, the green steel market requires EU legislation that defines what green steel is. Currently, there is no market consensus, other than it being steel with low carbon emissions, with each mill defining its own standards. “We are all talking about the same things but slightly different. And I am absolutely sure that we will see different shades of green and there will be different pricing points associated with abatement of CO2,” Milne said.

Access to renewable energy is crucial for EU steelmakers to successfully decarbonise their businesses. Therefore, new green steelmaking facilities are emerging in areas with affordable renewable energy, such as SSAB and H2Green Steel in northern Sweden and Hydnum Steel in southern Spain. “The future of hydrogen industry in Spain is in Puertollano, the first electroliser of Spain is there and that’s why we are located there,” Fernando Pessanha from Hydnim Steel said during the panel discursion. However, the EU’s renewable energy infrastructure is underdeveloped, necessitating government support for its expansion, according to industry participants.


Higher demand for steel from renewable energy industry

As investments in the renewable energy sector continue, they are boosting demand for steel products, particularly steel plates. With the development of the offshore wind segment, the need for thicker-gauge steel plates for foundations production will increase. Most of these foundations will be monopiles and the number of annually installed foundations is projected to rise from about 250 in 2023 to over 800 in 2027, requiring approximately 1.9 million t of plates over 80 mm thick.

Currently, neither EU mills nor foreign suppliers can meet the future demand for these plates. Rystad Energy, an independent research and business intelligence company, estimates that EU mills can supply only 1.2 million t of plates over 80 mm thick, with an additional 300,000 t potentially imported from suppliers like Nippon Steel, Posco, and JFE. This shortfall will inevitably lead to a shortage of plates for the offshore industry and subsequent price increases.

“This means that large companies will be able to procure first, while small developers will be second and third in line. So, we expect some stockpiling of that material so that the developers will have the material at hand when the time comes to use them,” Audun Martinsen from Rystad Energy said during his presentation.

As this shortage of plate used in monopiles could not be supplied by the EU mills, which are not expected to invest enough to catch up in capacity, Europe will start importing more ready-made monopiles, from China particularly.


CBAM and safeguards

Another widely discussed topic at the meeting was the Carbon Border Adjustment Mechanism (CBAM), its necessity, and the potential harm it could inflict on the EU steel industry as a whole. Both buyers and sellers agree that CBAM regulation is essential for EU steelmakers to remain competitive against foreign suppliers, who are globally increasing their production capacities.

“They key interesting market is India. They are increasing production capacity immensely, building new blast furnaces. They are also saying they will decarbonise by 2070,” Jaap-Jan Aardenburg from Tata Steel Netherlands said.

“There always comes import steel to Europe and if it comes without any demand to it and at much lower cost the rest of us managing to raise that capital and produce will be erased,” Halvard Meisfjor from Celsa Armeringsstal added.

However, these import restriction measures are affecting steel consuming industries. “I wish EOMs had more representation in Brussels, because their needs are hardly considered by the EC while making decisions to protect EU steel industry. Import of certain components starts to increase to the EU and domestic OEMs have hard time competing with them,” a conference participant told Metal Expert on the sidelines of the event.

Eventually, the course for decarbonisation of EU mills and CBAM will make European steel products more expensive and not always competitive with imports, an issue that the European Commission must address. There are expectations that it will do so and expand the CBAM product scope to include finished products as well.

Lilit Papoian –