Buyers across Europe have remained reluctant to pay significant premiums for low-carbon steel, pointing to weak market conditions and continuing structural challenges facing the region’s steel industry.
Under Fastmarkets’ definition, European green flat steel is steel made with combined Scope 1, 2 and 3 emissions of no more than 0.8 tonnes of CO2 equivalent per tonne of steel produced.
Scope 1 covers direct emissions from production, while 2 and 3 refer to indirect emissions linked to energy use and the wider value chain.
Market participants said premiums quoted by European mills capable of meeting that emissions threshold were generally in the range of €200-300 ($231-346) per tonne, broadly unchanged from recent months.
Discounts were possible for larger volumes, seller sources said, but no transactions were concluded in the assessment week.
According to seller sources, buyer interest exists at an initial stage, but resistance increases sharply once discussions turn to price, particularly when premiums move into the triple-digit range.
On the demand side, buyers continued to indicate lower workable levels, most commonly around €100-150 per tonne in the week to Thursday. Some market participants said spot business could be done at even less than €100 per tonne, with one source estimating the premium at €0 per tonne, arguing that premiums were more likely to be achieved through longer-term offtake deals rather than in the spot market.
Sell-side estimates for realistic premiums on green flat steel were reported at €150-170 per tonne.
Against that backdrop, Fastmarkets’ weekly assessment for the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €100-170 per tonne on March 26, narrowing from €100-180 per tonne in the previous week.
In contrast, sentiment in the long steel segment was described as even weaker, with market sources reporting almost no appetite for paying extra for greener products.
One supplier said customers were unwilling to pay any premium at all for green long steel, noting that the company’s conventional long products were already widely viewed as low emission because they are made via electric-arc furnace routes supported by relatively clean power mixes in the countries where production assets are based.
Fastmarkets’ methodology defines European green long steel as steel produced with Scope 1, 2 or 3 emissions at a maximum of 0.5 tCO2e per tonne of steel.
The aftermath of the US-Iran conflict was said to be another factor contributing to a stronger decline in demand for green long steel. The rise in oil and gas prices resulted in higher transportation costs as well as higher production costs inside Europe, which is expected to strengthen inflation. The financial sector was also affected, with banks increasing interest rates.
The combination of inflation and higher interest rates will result in higher construction costs, which may lead to a slowdown in construction activity and thus affect demand for regular steel.
“In such conditions people will be trying to cut costs as much as possible so ecology will not be the priority,” one trader said.
A second mill source, however, said he believes the conflict in the Middle East should have only a temporary effect on demand for green steel and that demand should return to previous levels in the near term.
Fastmarkets’ weekly green steel, differential to steel reinforcing bar (rebar) domestic, delivered Northern Europe was €0-50 per tonne on Wednesday March 25, stable week on week.
Offers varied within the wide range of €30-50 per tonne, while estimates of workable prices varied within the wide range of €0-50 per tonne.
The trader source noted that demand for green long steel is coming mainly from specific projects in Nordic countries and the size of the premium is negotiated individually.
