Across Europe, green steel produced in electric-arc furnaces (EAFs), with Scope 1, Scope 2 and upstream Scope 3 greenhouse gas emissions below 0.8 tonnes of CO2 per 1 tonne of steel, was offered at premiums of €200-300 ($207-311) per tonne during the assessment week.
Bids for such material were reported at €80-150 per tonne. However, several sources pointed out that mills were firmly insisting on prices above €150 per tonne for such specs, considering the costs of production.
“To produce green steel, we have to buy green energy, pay for environmental declarations,” a mill source said. “What’s the point of selling it [green steel] below cost?”
Transactions for such material were reported at €150-170 per tonne over the past seven days.
One large-size deal was also reported within the range of €150-170 per tonne for April-shipment material.
As a result, the green steel premium for flat steel in Europe was stable, with Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe set at €150-170 per tonne on Thursday, narrowing upward from €100-170 per tonne a week earlier.
Even though overall traded volumes for green steel were low across Europe, sources pointed out that there was a positive tendency over the past two years.
“In 2021-2022, traded volumes [for green steel] were zero or close to zero. Now we have a market — small, but evolving rapidly,” a buyer in Northern Europe said.
Besides, demand for green steel remained highly regionalized across Europe, with Nordic countries leading the race, sources said.
“In Norway, Denmark and Sweden, there are state-funded projects requiring green steel procurement. Not mass-balanced, but real physically produced green steel,” a second buyer source in Europe said. “At the same time, in Southern and Central Europe, interest in green steel is very low,” they added.
Sources said that, in addition to the high premiums, the lack of public projects across Europe — projects that could insist on green steel procurement — and the lack of stimulus measures to encourage “going green” were limiting demand for green steel.
“Buying steel with reduced carbon content is great for the environment — it’s a step in the right direction. It’s just not affordable when many companies are fighting for survival in a tough market,” a third buyer source told Fastmarkets.
Despite the looming challenges, however, European steelmakers were committed to the green steel transition and expected the market for green steel to grow exponentially in the upcoming years, supported by regulations.
“It’s a very small market so far, but with big potential. We have already seen an exponential rise in booked volumes [of green steel] year on year, and these volumes are only set to grow in the future, supported by the EU’s decarbonization plans,” a second mill source said.
