European green steel premiums have remained unchanged over the past week amid thin demand, Fastmarkets heard on Thursday May 21, with China-origin green steel slab booked to Europe again without a premium.
Trading in Europe’s green steel spot market was virtually at a standstill in the week to May 21, with price differentials holding steady, according to industry sources.
Deal-making remained elusive while the gap between sellers’ expectations and buyers’ appetite showed no signs of closing.
Fastmarkets defines green steel as material with combined Scope 1, 2 and 3 carbon emissions not exceeding 0.8 tonnes of CO2 per tonne of steel produced.
Suppliers continued to seek premiums in the range of €180-200 ($211-234) per tonne, with one Scandinavian steelmaker pushing as high as €300 per tonne.
Buyers in the spot market, meanwhile, were reluctant to go beyond €100 per tonne. Some buyers estimated the premium for a spot market deal at nil, claiming that premiums were confined to project-based transactions, rather than open-market deals.
The bulk of green steel trade continued to flow through bilateral, long-term offtake agreements tied to sectors with established sustainability commitments – including construction, wind energy, automotive manufacturing and home appliances – leaving the open market thinly traded.
“Steel accounts for a relatively small share of the final cost of a car or a washing machine, so absorbing a green premium is manageable for those end-users,” one Germany-based buyer said. “But for distributors and service centres, buying green steel for inventory is essentially tying up capital for no immediate return.”
Estimates of the premium achieved for project business were heard at €150-170 per tonne.
Automotive end-users were securing future green steel supply through offtake deals struck directly with DRI-EAF producers currently in development, arguing that scrap-based green steel – the variety most readily available today – did not meet the definition of genuinely low-carbon material.
Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, was stable at €100-170 per tonne on Thursday.
Green slab bookings
Chinese green slab has been finding its way into European hands, although buyers were securing the material without paying any meaningful premium over conventional alternatives, trade sources told Fastmarkets.
In May, around 40,000-50,000 tonnes of green slab from China was sold to Europe, notably to Italy, with prices reported around $590-600 per tonne CFR. But some offers were reaching slightly above that level.
Chinese mills – including HBIS, which has been among the more active suppliers of lower-emission slab – carry a modest premium on an FOB basis compared with standard grey slab exported from China, but that differential effectively disappears once the cost of freight is factored-in.
The calculation is complicated further by the fact that HBIS and similar producers do not operate exclusively on green production routes, meaning that the actual emissions intensity of any given cargo requires scrutiny before a green classification can be confirmed.
Produced from conventional routes, export slab prices in China were around $500 per tonne FOB, trade sources said.
Assuming a freight cost of at least $70 per tonne, the green slab cargoes were booked at roughly $520-530 per tonne FOB, so with around 4-6% premium compared with “grey” material.
At CFR Europe prices broadly in line with conventional Chinese slab, buyers have shown little appetite to stretch further.
Fastmarkets’ weekly price assessment for steel slab, import, cif Italy, was $600-620 per tonne on May 21, narrowing upward from $590-620 per tonne seven days earlier.
“Nobody is willing to pay extra for green slab here. We simply cannot pass that cost on,” one European re-roller said.
“Buying green [semi-finished steel materials], however, allows for some Carbon Border Adjustment Mechanism [CBAM] cost savings,” another source said.
The dynamic mirrors the broader pattern seen in finished green steel markets, where premiums remain largely a project-driven phenomenon and spot buyers consistently resist paying above grey-equivalent prices.
The latest green slab bookings from China to Europe, heard in April, were also made without any substantial premium.
