European buyers told Fastmarkets that sustainability was currently a “secondary problem, while the steel industry has to operate in survival mode.”
As for long-term offtake agreements, sources said there is still demand for green steel supplies for 2026-2027 and beyond, adding that they expect demand for decarbonized steel to pick in the long run, driven by new regulations.
“Green steel production is ramping up, but the pace is slower than we originally expected,” a buyer source in Europe said.
New green steel capacity in Europe will be mostly represented by EAFs and direct-reduced iron (DRI) modules, with about 40-50 million tonnes of new steelmaking capacity expected to come online in 2026-2027, according to Fastmarkets estimates.
In the spot market, a willingness to pay premiums for steel with reduced carbon emissions content was still limited among European buyers.
Sources once again pointed to the lack of clarity on standards for green steel in Europe, which was slowing its uptake across all supply chains.
Fastmarkets’ methodology defines European green steel as “steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.8 tonne of CO2 per tonne of steel.”
Buyer sources estimated that the achievable premiums for green steel with that level of emissions should be close to €100-150 per tonne. One buyer even suggested that some transactions for green steel could have been done with a zero premium “for marketing purposes.”
One mill source said that the premium for steel produced with such emissions content should be no lower than €170-180 per tonne.
At the same time, green steel that falls under the Fastmarlets specifications was on offer at a premium of €200-300 per tonne during the assessment week.
Mills admitted, however, there was room for discounts on significant tonnages.
Fastmarkets’ assessment for the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €150-200 per tonne on Thursday, unchanged week-on-week.
The willingness to pay premiums in the green long steel sector was even lower than for flat steel, because the normal production route for long steel is already less-polluting than most flat steel production.
Most long steel producers in Europe using electric-arc-furnaces (EAFs), which have lower emissions than blast furnaces (BFs) and blast oxygen furnaces (BOFs).
“It’s both blessing and a curse to be an EAF-based steelmaker on a decarbonization journey,” a mill source in Italy said, because “most state funds/grants to facilitate decarbonization are allocated to the BF-BOF steelmakers.”
Fastmarkets’ methodology defines European green long steel as “steel produced with Scope 1, 2 & 3 emissions at a maximum of 0.5 tonnes of CO2 per tonne of steel.” EAF producers, which use scrap as feedstock – typically emit around 0.8 tonne of CO2 per tonne of steel.
